Falling product ASPs and gross margins are set to erode Taiwan's fabless IC firms' profitability in 2015, according to industry sources.
Foundry chipmakers have seen their production capacities stay loose thus far in 2015, said the sources. While having sufficient wafer starts at their foundry suppliers, Taiwan's IC design houses including small-scale firms are able to cut prices to better compete with their bigger rivals, said the sources.
Unfavorable currency exchange rates are another factor hurting profitability at Taiwan's fabless IC firms in 2015, the sources indicated.
First-tier Taiwan-based IC design houses such as MediaTek and Novatek are unlikely to report profit growth for 2015, while second-tier and smaller players may face declines, the sources said.
Weaker-than-expected smartphone demand in China and other emerging markets has negatively affected MediaTek's performance in the first half of 2015. MediaTek is also encountering a more competitive 4G chip market and pricing pressure from rivals, the sources observed.
