Welcome to the MediaTech's 2018 4th Quarter Investors Conference Call. Your speakers today are David Ku, Mediotech's CFO and spokesman and Jesse Wang, MediaTech's Manager of Investor Relations. Ms. Jesse Wang will report 4th quarter results and Mr. David Ku will provide prepared remarks.
And after that, we will open for Q And A. Now, I would like to turn the call over to Ms. Jesse Wang. Ms. Wang, please go ahead.
Good afternoon, everyone. Welcome to Media Tech's 4th Quarter 2018 Conference Call. As a reminder, all content provided on this teleconference is for international purposes only. My intended for investing in investment advice. Not of the issue, no any of the independent providers is liable for any action taken in reliance on content content hearing.
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Now let's start with the 2018 fourth quarter and the full year financial results. We currently see here using NT dollar. Revenue for the quarter was $50,900,000,000, down 9.2% sequentially and up 0.8% year over year. Revenue for the full year totaled $238,100,000,000, roughly flat from 2017. Gross margin of the quarter was 38.9 percent, up 0.4 percentage points sequentially.
And up 1.5 percentage points year over year. Gross margin of the year was 38.5%. Up 2.9 percentage points from the previous year. Operating expenses for the quarter were $19,900,000,000. Compared with $19,500,000,000 in the previous quarter and $21,300,000,000 in the same period last year.
Full year 2018 operating expenses were $75,500,000,000, increased 0.6% year over year. Operating income for the quarter was $3,900,000,000, down 39 percent sequentially and up 198.5 percent year over year. Operating costs were for the 2018 full year was $15,200,000,000, up 64.8% year over year. Operating margin for the quarter was 6.3% compared with 9.4% in the previous quarter and the 2.1% in the same period last year. Operating margin of the year was 6.8%.
Up 2.7 percentage points from 2017. Main half of the quarter was $3,800,000,000 compared with 6 point $9,000,000,000 in the previous quarter and $10,200,000,000 in the year ago quarter. Net income for the year was $20,800,000,000. Down 13.7% year over year. Net profit margin for the quarter was 6.2% compared with 10.3% in the previous quarter and a 16.8% in the year ago quarter.
Net profit margin of the year was 8.7 percent, down 1.2 percentage points year over year. EPS for the quarter was $2.42 compared with $4.39 in the previous quarter and $6.5 in the same quarter last year. The accumulated EPS for the year, was $13.26. Compared with $15.56 in 2017. We also provide non IFRS financial measures, which exclude share based compensation, amortization of acquisition related assets and tax effect.
Please refer to earnings press release and the presentation for details. For the first quarter of 2019, we expect revenue to be in the range of $48,700,000,000. To $53,600,000,000, down 12% to 20% sequentially. And the forecast is generated of 30 0.9 $3 to 1 US dollar. We are forecasting the gross margins at 39.5 percent plus or minus 1.5 percentage points, and the quarterly operating expense ratio to be at 35% plus or minus 2 percentage points.
And now I would like to turn the call to CFO, Mr. Baby Zhu, for prepared remarks.
Good afternoon, everyone. So I think basically for the fourth quarter of last year 2018, so the overall performance is actually in line with our earlier guidance. For, especially, I think, for 2018, for the full years, in general, we see some pretty positive improvement in the overall financial performance, you know, especially from a gross margin perspective and also from operating, you know, optimize operating operating margin dollar perspective. Again, our gross margin grew from, 35.6 in 2017. To 38.5 in 2018, also, from an operating margin dollar perspective, I think the dollar grew more than 6% overall, on top of a group, flat tissue revenues, in 2018.
For fourth quarter of last year, I think for mobile computing, the revenue account for 30, 35 percent of overall revenue, For the growth sectors, which are including IoT, power management, ASIC and ASIC, which account for around 20 7 to 32% of our overall revenue, for the hardware sectors, which including TV, feature phone and other products, which account for 32 to 38% of 4th quarter revenue. So I think that's a few years' adjustments. Now, actually, it's, we have a pretty balanced 3 different business and patients. Again, this mobile computing growth sector, which includes, IoT, PM, Magnetic, and also the hybrid sector, which we include in TV, visual format, and lots of, Cash card products. I've been looking to 2019.
I think, the 2019 is a year full of uncertainty. Especially a lot of the, the global geopolitical issues and uncertainty. But, despite all those uncertainty. Think for 2019, we are still looking for, for another year of probably flattish revenue or maybe even slightly up. From a revenue perspective, on the gross margin side for 2019, we're confident we should be able to continue to see continued gross margin improvement, maybe at a much mild scale compared to 2018 versus 2017, but at least on the improving trend.
From the operating expense perspective, given the fact that we're still investing aggressively, for new area, which including 5G, asset business and also payment. But OpEx operating expense could be flat or maybe sign up. I think overall, we're still trying to manage our business so we can grow the operating margin dollars and also ratio slightly. Given this, certain uncertainty for the overall macroeconomic situations. And more importantly, I think we believe that after a few years of adjustment, for the business portfolio perspective, next year, we will see, for the mobile business and also for the growth sectors.
Are pretty much contributing to the equal weight of, revenue roughly 33% to 35%. And the Harvey structure will continue to contribute. It would be the stabilized falls from the cash flow and also from the the earning contributions, perspective. I mean, that pretty much concludes my, quick update for 4th quarters and also the 2018 coaching and also a quick preview for 2019.
Thank you, David. We're now ready for Q And A session. May we please have the first question operator?
Yes. Thank you. We are now in question and Please ask for questions after your name is announced. As a reminder, it is greatly appreciated that you turn off the speaker phone mode of your device to prevent possible echo effect. Thank you for your cooperation.
The first to ask questions Randy Abrams, Credit Suisse. Go ahead please.
Okay. Yes. Thank you. David, I wanted to ask you on the gross margin. In 4th quarter, the margin saw a pretty good improvement even though, I think the mobile was relatively stable versus non mobile, is in the low season and usually carries a higher margin.
So could you go through maybe where you're still getting improvement? If you still have some to go on the cost down platform, And then for 2019, your view is if, I guess, growth products grow in line with mobile, where you're still seeing improvement, whether it's product mix and smartphone and cost reduction or view on the competitive landscape?
I think for 2000 2019. Let me just comment into the 2019 first. I think for the 2019, especially from a gross margin perspective, there's a positive and it's inactive. I think the positive news will be because for the growth sectors, we're still looking for, high single digit or low double digit growth for the growth sectors. And overall, as long as we can continue to grow our gross percentage, which include an IoT, limited asset, think that should be accretive to our home.
I think that's the, positive number 1. I think another positive news, if we, if only zoom in to a smartphone perspective, we still feel comfortable that we should be able to continue to enhance our gross margin maybe at a much mild pace compared to 2018. So, because 2018 coming out from a very low base in 2017, but 2018, actually the base for the gross margin base on smartphones are high right now, but we still should we should be able to continue to see some improvements due to the segmentation improvements, the smartphone product. And, I think that's on the the sort of the positive news number 2, another positive news number 3 usually for the even for the mature product, especially on the digital TV side. If you recall last year, I think one of the reasons why we the gross margin pressures on the TV side is due to the, the memory, embedded memory price, you basically have an embedded memory price hike roughly years ago.
But now, actually, we're changing the, the pricing practice and also we actually maybe even taken out some of that. So I think we're kind of getting away or getting the last impact due to the embedded memory. I think that provides us a 4 on the digital TV side as well. So I mean, all your, that's actually given to the confidence that we should be able to see a solid balance gross margins, in 2019 just for the full years. I think you also asked me about, for the first smartphone, but I'm talking about the first smartphone.
It's really just, that segmentation improvement and also the country improvement on the cost structure side.
Okay, great. And maybe to quantify the margin, you're already 38 to 41 on the range. Is the way to think about it maybe a point or 2, or could you see a few points. Like is there kind of a range for a long time, 40 was the magic number to try to return to, but is there kind of a range you could could be toward later part of this year if if those drivers come through.
Well, I would say maybe just aiming for midpoint of this range. And again, depends on, you know, the FX grade, depends on the final product mix. I would say the midpoint of the guidance range is plus minus pretty much that's the best way to go, for first quarter. For the full year, I mean, I'll see your rates kind of indicate that. I mean, for the full years, We're looking for, the full year, 40% happiness up as our target.
Okay, great. And second question, just on the smartphone, it if you could give a view on how you're seeing or going into the year, kind of for year over year growth for kind of China smartphone and export, And then, relative to that, if you think your market share is stable or, you see gains. And then, I guess, from mix, how early sign on the P90, if you're seeing signs that could do better than the prior generation and help you gain a bit of better product mix?
I think for, smartphone specifically, for this year's, let me just take a one step back talking about the overall a smartphone. I think globally, our view, from a volume perspective, it will still grow maybe a low single digit. In terms of volume growth, but in terms of dollar growth, given the overall price decline or some condition, I would say, it's pretty much flattish. Maybe even coming down from a dollar perspective. And that's on the global side.
On the TriNet side, you know, or from both from a volume perspective or also maybe even from, adjustable market perspective, you know, in terms of dollars, maybe we'll call coming down a little bit. And I think that's the macro situation or the demand situation, if you like. From our perspective, I guess, what we try to do is, to do, you know, to cope with this awful situation is we're still trying to, a, increase our market share. Be, I think, more importantly, trying to increase ours with segmentation coverage. So that's why you see from the product portfolio perspective, you know, we did, by the way, we didn't really give up or, you know, get soft or easy on the actual venture level.
I think that's still, you know, a very important segment for us. We continue to expand, ultimately, in the entry level. So starting from last year, P50, later last year, P70. And now I should get into P90. I guess that's the, that's the trend, and that's the way, or that's the strategy to live how we actually continue to expand for the 2nd patient coverage as well.
Likewise, I guess, even though 5 gs are later this year, maybe even 1st of all the next years. I think 5G will also play a very important role for, to continue expanding 2 different second patients. Because we do believe by getting your diversification, a, we can enlarge our addressable market, b, they'll be positive and impressive to our to our gross margin. So overall, I guess for 2019, even though the macro situation is still very challenging, mean, our goal is trying to have a a flattish revenues on the smartphone side. And hopefully, if we do well, I mean, we can even see some, very small growth on the revenues on the smartphone for the smartphone segment.
Okay, great. And a couple of the long term areas, networking and automotive, should there be much, where it could be even like low single digit percent of revenue or do you think it's still like a 2020 plus for both of those areas?
I think for the new business, if I use these terms, I think revenue this year is still very low. This year, I mean, you know, trying to, kind of, talk about, you know, quote unquote a new business, which including the No 5 g, by the way, but merely an asset business, I think this year, it's actually, we call it, high, rough, it's mid single digit. I think next year, we can't quantify it or categorize as a new business, which including 5G, NASDAQ and also it's multi. We feel, it's a very good trend that we should be able to see the new business will grow, more than will contribute more than 10% of our overall growth in next year. I can get help you.
But that will be for next year. This year pretty much will still be the, mid single digit. And most part of that is still sounds what we call it. Gimi asked.
Okay.
Okay. The last housekeeping, the non operating income has been running closer to $800,000,000 to $1,000,000,000 a quarter. And I think your guidance on the call was $500,000,000, but I guess relative to the last year, Was there a factor maybe the last year, like even the last 2 years, there were, aside from auto chips, even it was kind of at a bit higher level. But is there a factor that that will be coming in at that or just conservative? Because there's less visibility there.
Well, I think it's, well, 1st of all, I think for 3 years, for the non operating income this year of 2019 versus 2018, I. E. Were coming down, for 2 reasons. I mean, first reason is actually, we pretty pretty much, accumulate or approves most of the auto ship deal, back to 2017 2019. 2018 renders, 20172018.
So 2.19, there'll be the, the very last payment, which will be much smaller. And, that's point number 1. Point number 2, I think starting from last year 2018 due to the Taiwan, IFRS change, for example, for our shares, so on the Google side, we would not be able to, improve this as the operating income I mean, even though we continue to sell some of the shares, but that, you know, proceeds will go directly to shareholder equity, rather than being or being accrued as the non operating income. So from a cash flow wise, you will see we have some cash flow from, you know, sales proceeds from divestment of our investment. But, for that part, we'll not be able to see, as the, you know, non operating income.
So, overall, due to that two reasons, again, a, auto chip, the accounting change, accounting treatment change, I think the non operating accounts will be much lower compared to the last year. And for the full years, again, we didn't really do provide guidance, but, if you go back to 2016, basically prior to, the auto change deal, in general, I guess, we are looking for every quarter, roughly, 500,000,000 MCs, for parkridge in general for your vehicle.
Okay. And your tax rate will be relatively stable as well?
Yeah. I mean, the the guy does give out what you roughly speaking 10% to 30% of the effective tax rate.
13% to 15%. 13% to 15%. Okay. Thank you.
Next up, we have Gokul Harihara, JP Morgan. Please ask your question.
Hi, good afternoon. Thanks, David and Jesse. First of all, could you talk a little bit about, 5G, how the evolution has been, what has been the interaction, as you launch your M70 product and samples with some of the customers. And let's say when you think about 2020, Are we primarily targeting China market, or are we also qualifying for US Global Markets where you probably need a little bit more of a millimeter wave, kind of support as well?
Well, 1st of all, I think for our 1st batch of, 5 g product, especially for the 5 g s o c, we're targeting for China, as a major market. So that's why we we only focus on, subject gears product. So again, for our first 5 gsOC, there will be a a substitute only product, relevant dual mode. Internally, we do have dual mode technology, but due to the old walls, we from the market and also product strategy perspective, we will focus on the subject first because we believe in China, due to the bandwidth issue, due to the cost issue and also due to the user case issue. I mean, it's probably the most physical product for the 1st batch of the 5 g product.
That'll be on the 5 gs l c. For the m 70, the first modem, I think, this year, I think, we will have some product coming up for m 70 but, given the fact that this year is the 1st year for the operator started building up the base station. So ASM team mainly, I think the main goal objective is being served as a pipe cleaner, basically work with our customer and also with our operator to do all kind of IOT task and also be the pipe cleaner to make sure it's, you know, you know, when when when the 5 gs are finalized, So we can jump in the 5 g modem into our SLC and take out my second half of this year and getting ready for the first half of next year's product cycle.
Okay. So David, if I could clarify, M70 supports millimeter wave as well.
No, M70 is only for sub-sixty years.
Also only for subjects. Okay. Okay. So when will you plan to have a millimeter wave support? Is it sometime in 2020 or is it you don't think that is going to be a very big priority for your customers also in the near term?
Well, I think from the technology readiness perspective, internally, just like, what I'll see your week say, during the charter school, I mean, for this year, we're looking to have a task okay, for the mini meter wave. But in terms of productization, putting into the product, probably we need to wait until 2021, because we've well used for 2020, is the 1st batch of 5 g in China. Southeast, probably is the best, solution for, for 1st wave of 5 g in China.
Okay. And second on the smartphone side, in 2019, given the cadence of launch of P90, well as probably some of the follow on products after P90 probably focusing on a slightly lower, pigment of the market in terms of price range. Could you talk a little bit about how you feel about market share situation in first half versus second half? If it's fair to assume, mediatek market share in second half is going be a lot stronger than first half just because of the product cadence?
I think for this year is, just pretty much like last year. I think for the last years, we see our, our market shares come 2018 versus 2017. I think we do a pretty good market share against, again, especially for, the the leading brand, you know, which included, so for Vivo, Xiaomi. And for 2019, I think we are still working hard. Hopefully, we can continue that much again.
But in spite of the first half versus the second half, I would say, probably will be pretty even though as well. We we generally see, say, second half will be particularly strong, given the fact because, for first half and the second half, we all have new product coming out. First half would be P90, I think, second half, we're gonna have another new product coming out as well. We will announce it, in the right time, but I would say it's gonna be pretty if you ask me. But in terms of this, from our product enrollment perspective and also design in perspective, but in terms of seasonality, I think, in general, Q1, is the lowest, again, right now, it's a little bit too early to mature from our Q2.
By general, we should be able to see Q2 as, a stronger out of seasonality, especially from a smartphone perspective.
Okay. Got it. Just another question, David, I think late last year, I think, some of the US regulators rule that Qualcomm was directed to license their IP to competitors, obviously, such as MediaTech as well. How does if that comes through, comes through a long term, what does it, is there anything that materially changes in your business in terms of how you design shifts, especially when it comes to 5G, etcetera, given how restrictive it has been in the last cycle. Especially during the 4 g cycle?
Well, I think the major difference really, the timing of our product if you recall, for the 4 g cycle, right? So, arguably, we are probably, you know, slightly more than a year, behind, But for 5 g, I feel like Riggs, the CEO talks several times, we wanna make sure we will be among the 1st batch So that's why we say, the m 7 g, the modem will be ready. Actually, when you demo that's, in few weeks, high data and obviously, there'll be end of, marked by February. And also the SOC will be ready before end of this year. So I think this time around compared to 4 g, in terms of running the timing of the realness of our product is actually very different.
Okay. Maybe if I can ask you a little bit about 5G product. What do you feel about 5G pricing? I think we've heard different commentary on 5G pricing from some of the the market player given that the pricing is likely to be significantly higher than where 4G came in at the early stage of ramp up Could you talk a little bit about how you feel? I think it's probably too early to fix it on, to specific business pricing, but can you talk a little bit about how pricing is going to shape up when it comes to ID next year?
I probably won't be able to comment exactly about the pricing, to the range. But I think, if we talk about trends, I think 5 gs prices are gotta be higher than 4 gs because, given the fact 5 gs are much more complicated terms of the communication agenda. So you can assume even from the cost wise, the cost of 5G is actually much higher than 4G. So, you know, if we don't have a higher ASP, I mean, if the industry don't have a higher ASP, it just doesn't work out, the master doesn't work out. So I think in general, the 5 gs speed drop will be higher.
In terms of how much higher, I guess, if depends on, the timing of the product and also the segmentation of the product. But, if you talk to, the people who are familiar with this industry, especially for 2019, given a very small volume over the CVC, I think the pricing is actually much, much higher compared to 4 g. But I think the overall is too small, so the pricing, I would say it's not a good reference if you ask me. But if you, if you fast forward that to 2020 next year, our view is actually, the volume will be much more meaningful. But even with much more meaningful volumes, I guess, the ASP, it's gonna be still gonna be, it's gonna be higher compared to the Portuguese, ASP, but again, like I say, If you walk out of physics or walk out of mass, you just need much more diarrhea to accommodate and to perform all those new features and functions, on 5 g side.
So the ASP, most likely will be higher, much higher.
Okay. That's great. Last question from my side, David. I think you guys have talked about potential M and A, and the pairing for some diversification through M and A, etcetera. Obviously valuations have been a sticking point.
Now, obviously, semiconductor industry valuations have come down. Could you refresh us in terms of what are you looking for from an M and A perspective in terms of maybe size, like, diversification objectives in terms of end markets, teams, etcetera?
Well, first of all, I think it's actually, it's, it it probably will not be able to be specific about my age. So let me try to be, a little bit general here. In general, I think if you look at the history of our media attack, I think we've been quite, open. And so to some extent, aggressive about adopting MAA strategy, mean, over the last few years, we spent $1,000,000,000 doing M and A. And, in general, our business has all been quite successful.
When you think about the acquisition of M Star, the acquisition about the risk tag and the acquisition about really, I mean, generally, it's all been pretty traffic, especially after a few years of, you know, integration is after we can truly realize the synergies. So, I think just like you would say, for 2019, given all those, uncertainties failures, but just from an AA perspective, maybe that's actually good timing from the validation perspective. So so we will continue to be, active if you like. In terms of the area, I guess, probably we will be more focused on the new area. For example, like the multi, like maybe even for, an enterprise asset and also, it's, on payment side.
Because, when we look at our business portfolio, on the mobile side, we believe actually it's a we can pretty much grow, based on organic growth. We don't really need to choose, MA routes, for the growth sector, which include the IoT, PMIC, and also the, automotive and asset. I think that will be the area because do believe actually that's, areas to invest a lot of opportunities. And, we can definitely leverage M and A to so with speed up or or or jump start on the business. So I think they'll be all for our focus, if you're asking from the, from the target perspective.
Okay. Got it. Thanks David.
Next in line, that's Simpson, Arote. Go ahead please. Yes,
thanks very much. David, I just wanted to ask about inventory levels that you seeing, in your customers. I guess right now, the industry is at elevated levels of inventories, particularly in China. And so I was just keen to get your perspective. You said, if you go go through the, what you're seeing in smartphones, what you see in, in, in aided, TVs and some of the bigger areas in the growth division, what do you see in terms of inventory levels versus normal and when do you think we'll see a burn off of, of these inventory levels and we get back to normal, normal trends in, in, in, in, in, in, in, semiconductors.
Graham, assuming you're talking about the inventory, the channel inventory, right, not non video delivery, or both?
Yeah. General inventories. Yeah. Absolutely. General inventories.
I think for the, high I prefer use the terms in general inventory because this is what we checked, on a constant basis. For the general inventory, especially in the fourth quarter, we do see, a second of a bleeding out a little bit. It's actually higher than the normal level if they ask me, but I won't say it actually is, it's reaching to something we call the risky level. And but somehow, that lead to a really soft demand in Q1. So that's why it's the, I would say, in general, Q1, it's a normal technology, but, actually, I the higher inventory level of building out in Q4.
That's actually top of the reason. And we do see the inventory being digested and being, trailing now, smoothly, in Q1. So far, it's actually, it's, end of January. I mean, the overall sale of emails or field through numbers, we feel it's actually getting better, it's getting better, but again, especially in China and also in, in the country, I think, in general, February, it's gonna be, the Chinese New Year's, that's actually provide some coffee shop in Greece, hopefully, actually, Dale will help to digest the chain inventory. In general, based on the current visibility, even though we haven't found a secure tool for you, in general, based on the past seasonality and also based on the current sell through numbers, revolving such a Q2 should be better.
Okay, compared to Q1. But again, that's a it's a tool to talk about, sort of the guidance of you, but due to just, you know, you can kind of see that that's actually based on the currently available information, those are kind of a gas emissions, watch our view on that.
Yeah. I just wanted to pick up on that as well, David. I mean, I guess a lot of chipmakers have been guiding for the year. And generally, the theme has been very soft Q1, but a very strong or stronger much stronger than seasonal second half. Can you maybe just, I mean, you've talked about a flat year or a flattish year for MediaTek for sales in 2019.
And you're starting from a low base in Q1 much like last year. As you look at the order book and how you see the year progressing, do you see a very similar pattern to 2018 where it started slow, but really picked up into the second half of the year? Or, you know, how do you think the momentum builds in, in your business as you go through 2019?
Honestly, I don't have the full year, clear, full year view based on the quarterly basis yet, but, if you ask me at least for Q1, I would say very similar pattern covers the last years. So, you know, when we talk about the full year, it's gonna be flattish, maybe starting up, pretty much based on assumption that if you'll see the Q1 this year versus Q1 last year, we see the flattish and seasonal growth a little bit. And Q2, currently, again, we see the similar pattern. So it asked me again, like, best the estimations you like, we'll be the similar pattern compared to last year.
Okay. That's very helpful. And I wanted to just comment a bit on the growth division, David. Can you maybe just go into a bit more detail about 2019, you know, I'd love to know, areas that you think are going to be particularly strong for PB attack and perhaps areas that will be weak know, what you're most excited about from this division, because I think we all can see that you're allocating a lot more R and D resources to build up this growth division and, you know, the momentum should be coming through over the next few years. So anything more you can sort of share with us and, some of the highlights and growth that we should expect?
Thank you.
I think for the growth sectors, I think we kind of talked about that in the past. We've really diversified, but if to help out, understand that we kind of, like, categorize that into, 3 major categories if you like. The first one's with the IoT, you know, again, the growth sector is in last year, 4th quarter last year is 27 to 32%. For this year, I mean, for the full year, Rob is speaking, we're looking for maybe 33 to 35%. So, within that row of sectors, I mean, half of that is, something we call the IoT.
Again, we'll use the terms, loosely. Which including wi fi, Bluetooth, more than system 5 MB IoT by general is all IoT. Okay. I would see I would see we'll have pretty good growth this year. That's the first one.
Again, half of our growth sectors. The 2nd largest chunk, so growth sector is something we call the power management IC. So for power engine IC, for 4th quarter last year, which will account for roughly 20% to 25% basically a quarter of, the growth sector. I think for this year, you will probably contribute a similar pattern. So again, what we'll think about growth sectors, think about half of that's IoT, the quarter of that is actually, it's a a payment, the power of NAIC.
Basically, that's a acquired business, for the rich stack. I think this year, we see, last year, this is pretty much double digit growth. This year's, I believe that all the payment will have the strong growth as well. Will be the double digit growth as well. So that's the 2nd largest chart of business.
The 3rd wire is something we call the the asset business, asset business, account for a 10% to 50% of overall prospects. Again, let me just repeat that a little bit, but I think that's important. The growth factors that come up this year roughly 33% to 35% of all of revenue within the growth sectors, half of that's IoT, a quarter of that is actually PMIC, 10% to 15% of the Atlantic. It is a small for others, but that 3, with a business have come for a good, like, 90% of the overall growth sector already. So for the asset business, because the base is resting low, terms of the growth rate, I think it's, probably that's 1,000,000,000, the highest of growth rate.
So that's, that's, the detail about the the growth sector. But in general, to make a long story short, I think we see, all three sectors, IoT, PMIC, and also the asset have pretty decent growth this year.
Great, great. And just lastly, David, I'm going to ask you a hypothetical question, but there's been a lot of talk about the licensing situation in this in the smartphone sector, particularly in light of this recent court case. Between the FTC and Qualcomm. But but in the event that Qualcomm is forced to license chip makers rather than handset vendors, know, I think I think that would mean the rest of the industry has to follow because otherwise it's discriminatory to Qualcomm. But but what's your perspective on this?
I mean, how would you absorb taking responsibility for your customers licensing as well as developing the modems that you do today? I mean, would not mean your margins would structurally decline. It just seems like a huge burden for someone like MediaTech to take this responsibility. So I was just keen to get your your perspective on on on, you know, what what this all means for from a media tech side of things?
Brett, I probably would not be able to answer your question because, that actually is a question with a lot of different, assumptions. And but, I I hear you. I guess your concern is, if it does happen, well, I guess I'll take a question. If it does happen, whether or not there will be a negative or positive impact to our business. Again, that really depends on what's the final ruling licensing deal because Again, it's, there's a probably not a medium tech review.
It's actually, if you check out, on the market, some people also talking about maybe one of the possibilities actually is, even though it's, the collecting, the roading from the chipset vendors, but overall, the road, the roads may be lower. Compared to the current level. And, my ability to transfer actually, you know, transfer that to the customer, at least over the customer's still paying less. Again, I don't think I will be able to answer this question because that's, really depends on what's your sound chain and also what's the final ruling. So I would really just skip that question.
Sure. Sure. Understand. Alright. Thank you very much.
Thanks, David.
As a reminder, now we're having finally, you'll be asked for questions.
Hi, David. Jason, thank you for taking my questions. So I just have 2 quick ones. My first question is regarding the 4G feature Just wondering if you can give us a bit more clue in terms of how to quantify the shipment for this year And also that management says smartphone business will be growing slightly in 2019. Does that already include the 4 g feature phone?
That's including the 4 g feature model as well.
Right. So, in terms of the shipment for a 4 g feature phone, do you think how big that can achieve for this year?
In general, we don't disclose a particular product segment. But by general, I get the 14 visual problem in our assumption. Actually, we don't really see that as a huge contribution in 2019.
I see. Sure. Thank you. That's very helpful. And, my second question is on the 5G SOC.
Just want to make sure, if it's a 1 chip solution from the beginning or it's actually a 2 chip solution to start?
It is a 1 chip solution. So when we say SOC, it actually does need the 1 chip solution. So, let me do 3 years. We're gonna have 2 products. For 5 gs, the first product actually is n17, which was announced last year's end of the demo that, during the end of the C next month, So that's, that's one product.
That's, a single, the motor only product. But for the SOC, we talked about a second half year, there will be a, integrated product, which means the SLC, which including modems, between processors, GPU and also something we call the APU, the the AI process unit as well.
I see. But, for the SOC product, the module, the modem will be actually, from M Seventy, the same one?
The core of our M Seventy definitely will I think we'll do some modification in here as well.
Sure, sure. Thank you. That's all from me. Thank you.
Ladies and gentlemen, we thank you for your questions. Now, I'll hand it over to Ms. Jesse Wang for closing comments. Ms. Wang, please proceed.
This concludes MediaTek's 2018 fourth quarter conference call. We'd like to thank you for your participation, and you may now disconnect.
Thank you. We thank you for your participation in today's conference. You may now disconnect. Goodbye.