MediaTek, the world's No. 2 mobile chipmaker, on Wednesday said its revenue for the current quarter ending March is expected to drop up to 20% due to weak smartphone sales in China.
"We have seen that Chinese customers were more conservative in placing orders in the last quarter and in the current quarter, as the country's domestic market slows down substantially," Rick Tsai, MediaTek's co-chief executive, said in an earnings call.
"For all of 2018, we expect to find the smartphone market saturated, as it is taking much longer for consumers to purchase a new phone," Tsai added.
However, MediaTek's officer sees sales of mid-range smartphones to continue to grow.
Tsai added that the company would bring facial recognition, computer vision and artificial intelligence applications to chipsets for mid-range phones.
For the first quarter of this year, MediaTek projected that its revenue will be between 48.3 billion New Taiwan dollars and NT$53.2 billion ($1.65 billion and $1.82 billion), down as much as 13.8% from the same period a year earlier, and down 12% to 20% from the fourth quarter of last year.
MediaTek is competing with Qualcomm in the smartphoen chip market. On Jan. 24, Qualcomm was slapped with a fine of 997 million euros ($1.24 billion) by European Union regulators for paying Apple to exclusively use its chips, from 2011 to 2016. The world's No. 1 mobile chip company also recently began paying a $778 million penalty in 60 installments to Taiwan's antitrust watchdog, which ruled in October that the company violated antitrust laws. Qualcomm was hit with similar fines in South Korea in 2016 and China in 2015.
Qualcomm is also in a series of legal battles with Apple over licensing fees, and it is fighting a hostile takeover bid by its U.S. rival Broadcom.
For all of 2017, MediaTek had revenue of NT$238.21 billion, down 13.5% from the previous year due to a loss in market share to Qualcomm.