Nevertheless, David Ku, chief financial officer, has insisted that technological advances will allow the group to boost sales, even in a mature smartphone market, by luring customers away from Qualcomm.
"Our revenue from smartphones is only about $4bn, whereas Qualcomm has about $17bn, so there's plenty of room to grow," he said. "MediaTek can have very, very healthy growth, outpacing the industry."
His bullish words contrasted with a string of analyst downgrades this year, as MediaTek's net profit in the first three quarters fell 40 per cent year on year.
Randy Abrams, an analyst at Credit Suisse, said the decline was due to the company's efforts to "defend share at the expense of margin".
Competition has increased sharply at the same time that Chinese smartphone sales have slowed — resulting in the first year-on-year sales fall in the second quarter, according to Gartner.
At the lower end of the market — supplying chipsets for 3G data connectivity but not the latest LTE products — MediaTek is under pressure from Spreadtrum, which is controlled by the Chinese state and competes "on pricing not performance", according to Mr Ku.
Huawei, now the biggest Chinese smartphone maker, makes most of its own chipsets, and its rival Xiaomi is reportedly planning to do the same.
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At the higher end, meanwhile, margins for both MediaTek and Qualcomm have been depressed by price competition between them — with the latter's push for new business stepping up after its chips were excluded from Samsung's latest flagship phone.
MediaTek has aggressively moved into LTE chipsets for higher-end phones, to the extent that they now account for about 40 per cent of its sales by volume — leaving it in a "duopoly" with Qualcomm, according to Mr Ku.
However, this move into new technology has been financially painful for MediaTek because of its failure to match Qualcomm's technical standards, analysts at Nomura have noted. They said MediaTek is unable to produce modem chips as small as Qualcomm's, giving a production cost advantage to the US competitor.
Mr Ku confirmed that this had contributed to weaker profits, and predicted that the LTE chip set industry would remain "a battlefield . . . a pretty severe fight" until the anticipated introduction of 5G networks in four or five years.
Mark Li, an analyst at Bernstein, said MediaTek remained about a year behind Qualcomm in the technical sophistication of its products, but that it had been gradually closing this gap. Its problems in adapting to LTE would ease over the next year, he added.
"Its historical record shows that as the products become more mature, MediaTek can craft their devices to make them smaller," he said.
Mr Ku said MediaTek hoped eventually to take technological leadership over Qualcomm, presenting the US company's own weak profits this year as evidence of how MediaTek has overturned the dynamics of the industry.
"People said Qualcomm would dominate smartphones forever . . . Years ago, I never thought that Qualcomm would have a single-digit operating margin," he said. "My view is that the technology gap now is getting pretty tight."