MediaTek has said that its second-quarter profit fell 12 per cent from the March quarter, or 49 per cent from a year ago.
Revenue came in 20 per cent lower from a year ago but this was expected and landed at the mid-end of the company's guidance.
A sign of the tough competition was that MediaTek's gross margin in the June quarter was 45.9 per cent the lowest since the fourth quarter of 2013. In March quarter this year, its gross margin was 47.1 per cent.
The company has indicated that its margin will remain weak. The company now expects gross margin to be between 42.5 per cent and 45.5 per cent in the third-quarter.
MediaTek has managed to wrestle market share from market leader Qualcomm. Its 4G LTE market share in China, the world's smartphone manufacturing hub, rose from 15% in fiscal year 2014 to 40 per cent. But it appears to have come at a huge cost.
MediaTek now expects the average sales price of its chips to fall this year, versus the previous guidance of 0-5 per cent rise. It is expecting a 5-10 per cent decline in 2015 revenue.