MediaTek Shifts Focus to Cars, AI Amid Supply Glut in Smartphone Market

Taiwan's top chip design company MediaTek is focusing more resources on chips for cars and AI computing as its smartphone clients face a supply glut and inflation and macroeconomic uncertainty dent demand for consumer electronics.

"We are definitely moving our resources very, very rapidly towards the automotive and computing areas, because those areas will provide our growth in the next three to five years," MediaTek Chief Executive Rick Tsai told an earnings call.

"In this very demanding environment, we are not reducing people. We're not increasing either. The critical thing is to allocate those precious resources," he said.

Tsai said everyone, including MediaTek, was rushing to claim that they were able to support generative artificial intelligence, such as ChatGPT.

"We're confident that we will be able to provide the capability to our customers," Tsai said.

MediaTek is investing heavily in AI because the new areas the company is focusing on are all related to computing, Tsai said. The development of autonomous vehicles, for instance, requires AI chips.

While smartphone demand has remained lacklustre in the first quarter, the company expects signs of recovery later this year.

"Demand for certain consumer electronics such as smartphones is weaker than we expected," Tsai said. "As customers remain cautious about future demand, we expect our mobile revenue to be flattish in the second quarter and to improve in the second half."

© Thomson Reuters 2023