MediaTek recently shared its financial performance for the first quarter of 2025. The company reported a consolidated revenue of approximately $4.7 billion USD, marking an 11.1% increase from the prior quarter. It’s notable that the growth was fueled mainly by demand for 5G smartphones, robust sales in Wi-Fi 7 chipsets, and traction in AI and automotive computing sectors.
Despite the increase in revenue, MediaTek experienced a slight decline in its gross margin to 48.1% compared to 49.3% in Q4 2024. The dip resulted from changes in the product mix and a previous one-time gain that had boosted profits. Operating income surged by 40.4% from the last quarter to NT$30.1 billion. However, compared to the same period in 2024, it was down by 6.6%. This year-on-year decline in profits is largely attributed to increased R&D expenditure and a strong previous year for comparison.
To drive future growth, MediaTek is upping its R&D investments, showcasing a commitment to AI computing and automotive chips and also expanding beyond its traditional mobile business. The company allocated NT$35.8 billion, about 23.3% of its revenue, to R&D. In collaboration with NVIDIA, it is involved in the GB10 project, part of the DGX Spark AI initiative. These moves signal its focus on AI-related advancements with anticipated returns beginning in 2026. MediaTek also launched its Dimensity 9400+, emphasizing power efficiency and gaming, supporting both generative and agentic AI.
While MediaTek’s leadership is optimistic, looming tariffs pose uncertainty for the company’s outlook. The potential economic impact requires close observation as the global supply chains navigate this challenge. Sales tied directly to the U.S. account for only 10% of its revenue, yet there is reliance on consumer electronics like TVs and home systems.
A noteworthy hurdle is the continued low demand for mainstream smartphones, especially in emerging markets, which aligns with a broader market trend. However, the company anticipates its second-quarter revenue to range between NT$147.2 billion and NT$159.4 billion, reflecting a potential 25% year-over-year increase. Gross margins are expected to sustain within the 47% to 50% range.
In conclusion, while MediaTek continues to diversify its investment portfolio aligning with AI and connectivity trends, the prevailing macroeconomic uncertainties and uneven smartphone demand require strategic adjustments. The upcoming quarters will be crucial for balancing these investments while adapting to a volatile global landscape.