MediaTek Reportedly Seeking to Sell Patent Rights in Face of Worsening Earnings Numbers

5 Feb

Leading Taiwanese chip designer MediaTek announced Feb. 1 to transfer 466 of its patent rights, worth over NT$475 million (US$14.30 million), to its newly established subsidiary, a patent licensing company, leading to media speculations that MediaTek may be seeking to sell its patent rights to lift its diving revenues.

MediaTek published its Q4 2015 earnings report on Feb. 1. In addition to the lowering profit, its profit margin also dropped to a record low — below 40 percent. MediaTek was not optimistic about 2016; in addition to cutting expenses, the chip designer also announced to transfer its patent rights to its patent licensing subsidiary with a reported attempt to sell patent rights for revenues.

In 2016, MediaTek’s operating cost is expected to grow 3 percent to 5 percent compared to the previous year, due mainly to the acquisitions of Richtek Technology, IliTek and Alpha Imaging Technology. MediaTek subsequently purchased a factory/office space from Epistar for NT$736 million. Besides cutting costs, MediaTek may be planning to seek new revenue.

Qualcomm, MediaTek’s rival in the high-end chip sector, owns important CDMA-based patents and has over the years been collecting royalties, which accounted for as much as two thirds of Qualcomm’s total revenues. Through patent licensing, MediaTek may have more bargaining power in the highly competitive market.

(Photo courtesy of TechNews)