© 2024 Alpha Spread Limited. All Rights Reserved.
www.alphaspread.com is not operated by a broker, a dealer, or a registered investment adviser. Under no circumstances does any information posted on www.alphaspread.com represent a recommendation to buy or sell a security. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way. In no event shall Alpha Spread Limited be liable to any member, guest or third party for any damages of any kind arising out of the use of any content or other material published or available on www.alphaspread.com, or relating to the use of, or inability to use, www.alphaspread.com or any content, including, without limitation, any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages. Past performance is a poor indicator of future performance.
You don't have any saved screeners yet
Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Welcome to the MediaTek 2018 Third Quarter Investors Conference Call.
Your speakers today are David Ku, MediaTek's CFO and spokesman; and Jessie Wang, MediaTek's Manager of Investor Relations. Ms. Jessie Wang will report third quarter results first, and Mr. David Ku will prepare -- will provide prepared remarks. And after that, we would open Q&A.
Now, I would like to turn the call over to Ms. Jessie Wang. Ms. Wang, please go ahead.
Good afternoon, everyone. Welcome to MediaTek's Third Quarter 2018 Conference Call.
As a reminder, all content provided on this teleconference is for informational purposes only, not intended for investment advice. Neither the issuer nor any of the independent providers is liable for any actions taken in reliance on content contained herein.
MediaTek provides Non-TIFRS financial measures as supplemental information. Earnings distribution is made in accordance with financial statements based on TIFRS. Unauthorized reporting or redistribution of the video, audio, text and the presentation contents of this teleconference is strictly prohibit. By partaking in this teleconference, you agree to accept the foregoing terms and conditions.
Now, let's start with our 2018 third quarter financial results. The currency here is in NT dollars. Revenue for the quarter was TWD 67 billion, up 10.8% sequentially and up 5.3% year-over-year. Gross margin over the quarter was 38.5%, up 0.3 percentage points sequentially and up 2.1 percentage points year-over-year.
Operating expenses for the quarter were TWD 19.5 billion compared with TWD 19 billion in the previous quarter, and the TWD 18.2 billion in the same period last year.
Operating income for the quarter was TWD 6.3 billion, up 54.2% sequentially and up 27.2% year-over-year.
Operating margin for the quarter was 9.4% compared with 6.8% in the previous quarter and 7.8% in the same period last year.
Net income over the quarter was TWD 6.9 billion compared with TWD 7.5 billion in the previous quarter and TWD 5.1 billion in the year-ago quarter.
Net profit margin for the quarter was 10.3% compared with 12.4% in the previous quarter and 8% in the year-ago quarter.
EPS for the quarter was $4.39 compared with $4.75 in the previous quarter and $3.26 in the same quarter last year. Please note, our net income, net profit margin and EPS in the previous quarter include one-off nonoperating total gain which were not recurring this quarter.
We also provide Non-TIFRS financial measures, which include share-based compensation, amortization of acquisition-related assets and tax effect. Please refer to earnings press release and presentation for details.
For the fourth quarter of 2018, we expect revenue to be in the range of TWD 59 billion to TWD 64.3 billion, down 12% and 12% sequentially. At a forecasted exchange rate of TWD 30.8 to USD 1, we are forecasting the gross margin at 38.5%, plus or minus 1.5 percentage points. And the quarterly operating expense ratio to be at 32%, plus or minus 2 percentage points. For the shipment guidance, we expect shipments of smartphone together with tablet to be between 100 million and 110 million units in the fourth quarter.
Now, I would like to turn the call to CFO, Mr. David Ku, for prepared remarks.
Thank you, Jessie. Good afternoon, everyone. I think firstly, I would like to talk about the 3 major business segments, their overall performance in the third quarter.
The first one is mobile computing business, which including smartphone and tablet. For third quarter revenue coming out from mobile computing account for around 30% to 35%, I think -- specifically, for smartphones, I think the new product Helio P22 and A22. P22 is our mainstream product, and A22 is entry-level product. Both product got pretty good customer feedback. I think we're making continued growth in market share gains with customers like Xiaomi and Vivo. Also for Helio P60, which is a mid- to high-end product, we also adopted by Oppo and Vivo and started selling in overseas market, such as India and Southeast Asia.
In end of third quarter and beginning of the fourth quarters, we also start introduce our new Helio [ spruce ] product called Helio P70. That's a mid- to high-end product. Basically that's the new product after P60. We have enhanced AI engine and improved overall performance in terms of power consumptions and the AI capability in P60. I think the P60 is scheduled to be mass production in 4Q this year.
So I think other than the P60, P70 this year, there's also P22 and A22. The new products for the first half of 2019 is also -- were prepared and underway. I think we are -- was expecting before end of this year's, we will also announce the first half next year product maybe in the advance of product launching them sometime in December.
Other than Helio products, I think, we also working very diligently and aggressively for our 5G product portfolio, like what we've disclosed earlier this year. I think the first Helio M70, I guess, the modem product, will be ready in first half 2019, next year. And also, I think, by end of next year that we will also have our first 5G SoC ready by end of next year.
I think that conclude the first main section about mobile's computing platform.
The second business group is, we called the growth product business group, which includes IoT; power management IC, PMIC; and also consumer ASIC. I think for this group of categories, account for a good 30% to 35% of overall revenue in the third quarter 2018.
I think for third quarter, especially for the growth sector, we see a pretty strong seasonality -- strong, basically, more than double-digit growth in IoT, PMIC and ASIC. Especially for IoT things, we are the market share leader in VAD. And obviously, they have trenching product of the roof products from the VAD by our customers, for example, like the Amazon Echo Dot and Fire TV Stick, small plug and maybe even a microwave.
Other than the VAD voice is system device products. We continue to improve our wireless track and also the AI-audio integrations. And for the shipment machine, we also start to ship Narrow-Band IoT products. We believe that will be another growth driver starting from fourth quarter and also extend to 2019.
For power management IC business sectors, we see very good revenue growth through group synergy on top of PC segment and now actually extend that into the smartphone sub-PMIC segment. We also expect more revenue contribution from PMIC out of smartphone side, starting from second half 2019.
For the customer ASIC side, we see very strong seasonal sales in third quarter, especially, organic ASIC IC. Other than organic ASIC IC, our high-speed transmission 35P product has been launched successfully. Now, we're working with our customer the product in speaking out in host system be validate. I mean, the overall progress actually looks smooth. We're expecting the product will start to ship basically second quarter of next year.
So the last one but not the least, the business segment, it's called the harvest product segment, which including TV, feature phone, optical storage and DVD. I think for our harvest product segment account for 30% to 35% of our overall revenue in third quarter of 2018 as well.
As for the third quarters, I think, the final revenue is slightly better than expected due to strong seasonal demand, especially for the TV. We also see some early pooling GB situations basically between orders from fourth quarter to third quarters.
I think for TV, we -- now the integration with the MStar is in progress. The overall -- the full integration will happen in January 1, 2019. We expect the combined synergy will provide us pretty good sales. And plus, we'll continue to hedge the market share and also the profitability.
Other than the business segments updates, I think I'll also like to take the opportunity to talk about the 2019 recap. I think, for 2019, overall, we see a pretty solid progress on product comfort, competitiveness improvement, especially for smartphone and also the market share gain for the Tier 1 customer. As you can see, we already see a pretty good operating margin dollar improvement, both from the quarter-over-quarter basis in third quarter or year-over-year basis for the first 3 quarters of 2018.
We actually will continue that improvement on profitability in fourth quarter and, hopefully, first half 2019 as well. I think the overall shares for 2018 and also preparing over to 2019 is we're trying to be much more balanced and diversified stronger fundamental on what the all 3 decent business unit, basically mobile ability, growth sectors and also the harvest sectors.
For 2019, overall, we find the purpose for the macroeconomy and also the industry cycles -- the fun leading cycle, somewhat at higher uncertainty. So for 2019, especially, we were a little bit more cautious based on the currently available information. But despite of the short-term volatility, I think we will continue our investment in 5G; AI; ASIC, especially for data ASIC; and also related to new area to increase our product, technology, compatibility and platform. And we believe we'll actually continue to invest in most area where lay down a good foundation for the long -- mid- to long-term growth going forward.
I think that conclude my comments. Thank you.
Thank you, David. We're now ready for Q&A session. May we have the first question, please, operator.
[Operator Instructions] The first one we're having here is Randy Abrams, Credit Suisse.
Okay, yes. I wanted to ask the first question, just a follow-up on the macro. I guess we can all see some of the pressures in the financial markets in some of the segments. I'm curious so, from your business, if you're starting to see that slowdown in customer activity, whether the mobile or if it's showing up in some of the consumer growth products. And both from a units but also from pricing environment, as you look at the 2019 uncertainty, is part of that in ASP and maybe more on certainly on being able to hold this margin gain that you've been able to achieve over the past year?
Randy, I think for 2019, overall, we don't have the detail to support these all the way into 2019. But based on what we see, especially for the fourth quarter, we do start to feel -- let me see, what's the right word, I think the uncertainty and volatility, especially due to the macroeconomy situation, and also in the cycle somehow start to get out of it. But it doesn't mean we see any concrete evidence or signal yet. But just we'll talk to the customer, when we talk to the channel, I think people just start to feel cautious about in 2019. I mean -- I guess, there's no surprise, part of the reason is due to the China and also the U.S. trade war right now. But we understand this is going to be an ongoing process, whether or not there is going to be certain issues that we need to be in the interest, maybe, maybe not. But I will say, the macroeconomy probably just belong to the sectors. We'll also see some other factors, well. I hope that helps the input. I think, again, it doesn't mean we see any companies out of the resource signals. Just when we talk to our customer, I think people start to be cautious about 2019, especially for the first half 2019.
Okay. Yes and I did want to ask on the industry cycle. We are -- I guess, we have notes late stage 4G. We're coming off it in China 2 years, I guess on the official or the MIIT, which show as down double digits. Are customers, I guess, factoring in the macro? Are they kind of giving a base view that mobile market may still have a third down year next year? And I guess, circling back to the pricing. Are you seeing signs that the pricing environment may get a bit more severe? Is that -- or is it still ongoing kind of the same pressure you've seen? No real change in the pricing environment?
I would say both for third quarter and fourth quarter, you will see it, since the pricing problem is getting worse. I would say it's similar to competitor pricing problems out there.
Okay. And on mobile, I guess on a base view, are your customers giving you a feel that we may have another down year for mobile shipments at this stage for next year?
I think, we're in a -- most of our customers are planning for next year's shipment. In fact, obviously -- I think most companies have this pretty aggressive target next year. But when you talk to the supply chain, [indiscernible] we talk to our people, I guess, again, it doesn't mean that people feel negative or anything like that for next year. But just people talking about either prepared for the [ past ] but somehow to kind of feel the uncertainty kind of feeling the -- that next year going to be -- going to be a greater impact in 2019. I think that's something which can be observed.
Okay. And I wanted to ask you on the high end product mix. If you could give a flavor -- I know you don't have the Helios kind of expanded, but the way you used to think of the category P60, P70, P22, where your unit volume now, kind of a rough range where you're back to on unit volume? It looks like when Qualcomm kind of moved a product into snapdragon at 700, it may have slowed the momentum on P60. So if you could talk about maybe expectations for P70, regaining a bit of that mid-to high-end share in the market?
Well, I think, we have pretty good market share in through the P60. And P70 is basically just a follow-up product, basically is the upgrade -- a lot of features, both from performance and also overall our consumption perspective. So far, I guess, if again also if I win, actually, I think the product was shipped. The customer product will start to ship in fourth quarter this year. And overall, we feel that not just secured Walmart this year for the mid- to high-end this year, but we contend -- maintain our market share and hopefully we can continue to expand both from P60, P70 and also later on in early next year, P80's product.
Okay. And last question, shifting to networking for now, you're getting the product kind of finalized to go into production, could you give us a flavor a bit on the ramp-up your expecting? And maybe, if you've done some sizing on the type of market? You're coming after as you start moving into this networking category?
I think this is only our first or second project win. So far, based on the schedule, I think, most likely we'll start to see some early revenue maybe after second quarter next year. So, so far taking now the system validation went well, I see it sometimes ramping up. But the good news is actually is -- now actually with these successful share wreckers, we're gaining a lot of the activity going on. [indiscernible] but obviously, the momentum looks very positive. But in terms of the overall addressable market, we don't have a particular number yet. But given the size actually of the whole data generation. And I guess we do believe actually the addressable market is actually -- the long-term growth is pretty solid. It's always welcome products competitively.
Okay. And can you give flavor the scope like what exact opportunities are you targeting? Is it more on the enterprise like ethernet networking or more into carrier networks? Or like can you give a little more flavor on the type of areas you want to go into here?
I think, data switch was on top of the list. It's obviously both for data center and also for the company's -- the company's IT mainframe -- the IT is actually, I think, that's definitely on top of reason. And also actually as of right now, a lot of different customers applying the technology on new applications for [indiscernible] smartphone, maybe for AI integration, maybe for RF integrations. I think in general, high-speed service is very fundamental to IP. You can apply the high speed service to other different areas on top of data switch business.
Next, we're having Gokul Hariharan, JPMorgan.
Couple of things I had. One, could you talk a little bit about what you're seeing in terms of the next year's high-end products and what it means for ASP? Are you seeing pricing go up on a like-for-like basis, for let's say, PAT versus P60 or some of the other families? And you've seen smartphone ASPs go up due to -- in most markets due to increase in features. Is there any chance that you may see it increases during the next year?
Well, I think based on particular product portfolio especially coupled with the potential 5G end of next year. All from a product's orientation perspective, that should be positive from an ASP, a branded ASP perspective. But by saying that, that was the -- ASP, I think product mix is one driver. Another driver should be competitive landscape. So far, in 2019, dash 2,000 is under observations. For Q3, Q4 I think that looks okay. Okay, doesn't mean good. Okay just means getting work, getting work. Also 2019, that's something we need to observe. So from product portfolio perspective end of the year -- [indiscernible] portfolio continue about, what we would call, just the continued expansion, get into financial of low to mid- to high end. And you need to do that. Also the comparative lens therapy for competitive pricing, that's something which should be observed next year.
Gokul, are you still online?
Yes. With respect of check on the ASP for this year first month on product, how much of the ASP is up on a year-over-year basis in 2018 roughly?
I think, for the full year, I will say pretty much it was flattish to maybe 0% to 5%.
So flattish, okay. Secondly, on the gross margin side, David, could you talk about what is you're thinking about gross margin. I know that Mandarin called you guys. They don't want to guide about whether it would go straight to gross margin, but could you talk about what are the kind of variables that go into your gross margin expectations going into next year, given that Smartphone population is getting better, some of your growth wins are still accelerating?
I think for 2019 gross margin, we probably will not be able to provide guidance for full year in 2019, we'll talk about that. I think we'll provide with some visibility by first quarter next year. Right now, it's actually a bit too early to talk about that.
Okay. On TV product, you had some gross margin drag in Q2 and Q3. Is it already coming back in Q4? Or is that something that comes back in first half of next year?
I think with digital TV, we do -- we're facing some market pressure this year mainly due to the embedded DRAM, basically no good at [ KGV ] of our pricing. The good news is actually the pricing started softening, and coming back, where they starting from Q4. But we probably won't see that reflect into our cost until first half next year because we still have some entry issue to resolve that. So this year, the gross margins on DTV side for third quarter and fourth quarter, I would say, probably just flattish. Hopefully, starting from next year, after we get past about the DRAM issues, the memory issues, we should see some slightly better gross margin next year.
Okay. And lastly, you mentioned that some of your 5G early products is starting to sample with customers. Talk a little bit about what the feedback on your stand-alone pricing model have been from customers? And could you also remind us of the time line? I think I've missed that on both the stand-alone modem as well as embedded SoC for 5G?
I think for next year, the 5G modem, the Helio M70 will be ready first half next year. I think that modem -- why we have a stand-alone modem, is actually, next year, even from an operating perspective, they call the 5G as a precommercial launch, which means we need to work -- do a lot of work to make sure that the IoT with operators work smoothly. And having the stand-alone working on that actually is much easier and more efficient. But at the same time, I think we also have the 5G SoC product starting -- aiming for 2020 product cycle. And obviously, actually, starting from 2020, 5G product most likely will start from mid- to high end. And we'll talk on there and start to expand the 5G product portfolios from top to maybe mid-near in 2021.
Okay. And are you seeing anything changing in terms of the pace of adoption that you expect on 5G? Have you seen if you were expecting more products end of 2020 or 2021.
Not really. I think we -- again, our view is that 2019 will be from operator perspective, we're laying out the foundations, which means start to checking the CapEx on the base station '17. We'll start working with 4 manufacturers and also chip manufacturers to precommercial launch for the 5G initiative. And the work is ready for the task team and IoT task team will stretch out. Probably, the real year -- the first year for the meaningful -- of small meaningful shipments for 5G will be in 2020. And if you chart it on a quarter basis, maybe by end of 2020, we'll see some more meaningful volume of shipment. So best case that 2019 will be precommercial launch. And in 2020, we'll start the shipment for 5G.
Right now, we are having Brett Simpson from Arete.
David, just regarding the rising import tariffs into the U.S., I'm just wondering what effect that's having on your business right now. I mean, a lot of talk about pull-ins, customers pulling in and shipping earlier to avoid the rising tariff in Q1. Is that something you're seeing? Is Q4 demand sort of inflated because of this tariff hike? And maybe you can talk about what that might mean for Q1. Do we see a bigger than seasonal decline in Q1?
Well, I think the pull-in effect we talked about earlier is actually mainly on the digital TV side. So maybe it might be one of the reasons for the TV pull-ins is actually due to the U.S. import tariff. But in reality, I guess, I would say that Europe's import tariff probably of deals impact still between -- because a lot of digital TV manufacturers or companies, they do have manufacturing facilities outside China. So which would just help them to reduce the impact from tariff. On the other end, for other line of our business actually is, especially for smartphone, I think most of the smartphone are either selling in China or in emerging country. So the impact due to cost by this import tariff is actually somewhat minimal as well. So overall, I would say the fourth quarter's demand, I would say it's actually normal, and I would say it isn't actually inflated due to the full year.
Okay. That's helpful. And anything you can sort of share with us on inventory channel, inventories across the businesses that you service? Anything unusual you're seeing on the inventory side?
From our perspective, especially some emerging market in this marketing channel, overall, it seems the-turn-on level is that -- turn on inventory level from our perspective is actually pretty normal. We don't have this as overstocking or it's too low, I just -- I would say it's normal. It's on a pretty normal level.
Interesting, okay. That's helpful. And then David, just on 5G, you haven't announced any design wins, per se, yet. Can you maybe talk about sort of customer engagement, the level of customer engagements you're having today? And do you think this is an area where we're going to see some significant government handset subsidies as we start to get into the ramp phase -- the meaningful ramp phase, probably more like 2020? But can you share with us what you think the -- on the subsidy side because we haven't -- we've seen subsidies get cut consistently over the last couple years in China -- smartphone subsidies. Is that likely to reverse when 5G starts ramping?
I think, currently -- to be honest, actually, we don't really see any aggressive subsidy program ready yet because, from my perspective, maybe it's a little bit too early to maturely talk about that. After all, even for 2019, from an operating perspective, especially in China, probably the main goal or the major path is when we start to build up and then what? So if it's going to be anything on 5G smartphones, I think, most likely, it will be very small volumes on trial basis in 2019. So in terms of subsidized program, probably, we need to wait second -- or perhaps next year to understand more about all 3 major operators' view or plan about subsidy program for next year.
Okay. And then in terms of customer wins for 5G, anything you can -- how many customers are you engaged in on 5G today?
I think, all the leading customers in China right now are turning to our 5G caller portfolio from the smartphone perspective. And we're in discussions with most of them.
And just shifting gears to AI, David. We're seeing guys like Google come out with stand-alone dedicated AI chips for the handset, the visual core. Most guys like MediaTek are putting AI cores into the SoC today. Do you think we're going to -- how is this going to develop? Because I guess, looking at camera specs, we're going to see a lot more AI processing requirements in the next couple years. Do you expect to see dedicated stand-alone AI processors to emerge? Is that something that you think is inevitable in smartphones over the next sort of 1 or 2 years?
From our perspective, especially for mainstream and maybe even to mainstream high end, if we don't come in on flagship product yet, we do believe actually in the AI processor. From our perspective, we have something called MDLA, the machine deep learning accelerators, probably make more sense, both from cost and also from a performance perspective. For example, our current P70, it also is a next-generation product in AI. We will always include a pretty powerful MDLA in theirs. And after talking to third customer and also a lot of adopters, they are all happy about that performance. Whether or not they will have a requirement for stand-alone, separated AI processors, our methods at the super high-end flagship products, overall, specifically on the smartphone side. For the mainstream to high end, I think the embedded processors should be enough. Unless, when we actually introduce the next phase of AI, people truly go crazy about trying to let me more AI integration capability. But from our perspective, this was the first batch, taking pictures, object recognition, all those AI function. We serve well already for MDLA. But whether or not that just becomes the first batch of the AI application and going for people finding more AI application, they will find more computing power that will lead to a separate chipset, might be okay. But unless for this -- for next year, is then just not what we see.
And just maybe final question on AI ASICs going into data centers. I guess, you have lot of the IP that's needed to develop these AI ASICs, and you mentioned sort of these 112 gigs, 56 gig studies are something you're offering today. Are you guys developing any AI ASICs for the cloud, either on behalf of customers or independently for yourselves?
No, actually. Currently, I think the major AI building block with meaning right now is actually that's the MDLA, basically, the AI portion we embed in a CPU. For our ASIC integrations right now, we generally view as in effect asset for our customers.
Next one to ask questions is Michael Chou from Deutsche Bank.
David, just a quick question. Regarding the smartphone ASP, what is the trend in 3Q and 4Q this year?
I think for smartphone for Q2 and Q3, in general, it's actually flattish. I would say pretty flattish.
Q3 flattish. Q4 is still, right?
Q4, yes.
[Operator Instructions] Next, we're having Charlie Chan, Morgan Stanley.
David, just wanted to make sure for the autochips disposal gain, is that going to keep happening again in next quarter? And what was the amount?
I think we recognize -- for this year, we recognize in Q2 already. So that's all for this year. So we might have a much smaller portion for maybe Q1 and Q2 next year. I think the overall amount probably would be around, Charlie, less than TWD 1 billion maybe first quarter next year or second quarter of next year. I think, for the exact timing, those are the models that depends on the performance this year. So there's still some change that will vary it. But for this year, that's how -- basically, they're are all being recognized and reporting Q2 financials. In Q2, it's now -- operating incomes already.
Yes. 2Q was around $3.5 billion, right. So are you saying 1Q next year will be around $1 billion only?
Probably the size is less than a $1 billion. Again, that's a full year number. We're going to see this final performance for this year.
Okay. So it is in '17 due to the accounting rule change, right. It's just the timing you booked the disposal gain?
Right. Right. Right.
Okay. And secondly, can I get some breakdown for your smartphone shipment by reaching today? Yes, I just want to get a sense, your exposure to different end markets: China, India, Africa, et cetera.
Charlie, we actually didn't provide that level of details. But maybe just the export versus China. I think for this year, I think exporting is around 60% to 70%. China is around 30% to 40%. But in terms of the numbers [Audio Gap] China area. I would say India is definitely on top of the -- in terms of market shares.
Okay. Okay. And lastly, so several investor ask about pricing competition, right. So do you see more competition now as you've seen mid- to high end, like P series, or coming from those lower-end 4G segment?
I'll say both. Because if we base on what we see for the pricing around them both for Q2 and Q3, I think both for entry level and also for mainstream, which is Helio P series, are all facing pretty strong pushback from our competitors. As you know, I mean, if you look at the market shares first half versus second half, when I say market shares, I'm referring to our market share for the -- it's going to be the top 4, top 5 guy. I think overall, we do see our market share continue to expand. And that actually is putting a lot of pressures on our competitors, so you can assume that definitely comes back with pretty aggressive pricing competition. So this is, like I say several times earlier during this call, I think the competition, especially for the pricing competition, it's -- the growth is stabilizing. It's actually the same. And but the good news is actually that we don't really see this getting worse yet.
Okay. Yes because, you just said that blended ASPs has been quite flattish in the recent quarters, right. So if we want to take a look at apple-to-apple ASP erosion this year, how much it would be for this year ASP erosion?
I think on a like-to-like basis, I think it still comes down. I would say it's 5% plus, minus. Maybe even 10%. I think the reason we were struggling last about here is because of the product mix enhancements.
Okay. It is around 5% to 10%?
Yes, correct.
[Operator Instructions] Now we're having Gokul Hariharan, JPMorgan.
[Technical Difficulty]
Gokul, I'm sorry. We are not able to hear you clearly. You've got a lot of static.
Hello? Can you hear me?
Yes. Now it's better.
Yes, I'm sorry about that. So on the growth segment, David, could you talk a little bit about what is your growth outlook for next year given some of the macro uncertainty? Are you still looking at double-digit growth next year? And within the growth segments, maybe you could rank which of the areas where you see the most promise going into 2019.
Sorry, can you repeat the question again? I have a problem hearing you clearly.
Yes, so my question was could you talk about what is the expectation for the growth engine segment in terms of growth next year? Are we still at double digit maybe closer to 20% kind of growth? Second, within the growth segments, what are the areas where you see the most promise from a growth perspective next year?
Okay. I think for growth sectors for next year, again, it's maybe a bit too early to talk about, indeed, the growth rate. But just in general, based on the diversification of the product line on these to growth sectors. And also, it's the specification on the PMIC side, I think, overall, we feel it's still have a good chance to tick up its growth next year.
Okay. And what would be the 2 or 3 areas where you have the most confidence? Is it PMIC and NB-IoT? Or which do you think can be meaningful by next year?
I think for next year, NB-IoT will definitely be one of the drivers. In general, it actually is IoT, especially WiFi for next year. We still see both from a kind of upgrading, also, the market share gain on WiFi side. And PMIC, we'll see more and more PMICs on smartphones have some PMIC. And also, for the PMIC organic growth, which is on the PC and modem design. I think that's what we see for the 3 sort of potential growth drivers on these growth sectors.
Thank you for all your questions. Now I'll hand it over to Ms. Jessie Wang for closing comments. Jessie, please go ahead.
Ladies and gentlemen, this concludes MediaTek's 2018 third quarter conference call. We would like to thank you for your participation. And thank you. You may now disconnect.
Yes. We thank you for your participation in today's conference. You may now disconnect. Thank you, and goodbye.