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MediaTek expects`slight' rise in sales despite price war

MediaTek Inc (聯發科技), the world's largest maker of chips for DVD players, expects sales in the current quarter to be "slightly better" than in the second quarter, company chairman Tsai Ming-chieh (蔡明介) said.

The company chalked up sales totaling NT$9.7 billion (US$286 million) in the second quarter.

Sales in the third quarter "should still be slightly better than in the second quarter," he said on the sidelines of a media conference in Singapore.

Competitors "lower the price to the point where I don't think they can tolerate it anymore, unless they want to be out of business," Tsai said.

MediaTek, the first to combine the functions of several DVD player chips into one, lost market share as rivals introduced similar products at lower prices.

"The price competition is gradually stabilizing and this will be better for their overall business margins," said Jessica Chang, an analyst at Macquarie Securities Ltd in Taipei.

MediaTek is counting on new products to maintain profit as competition increases for DVD-player chips, which account for most of its sales. It is also boosting spending to give it an edge over its rivals.

It plans to invest more than S$50 million (US$29 million) over the next five years as it sets up a research and development center in Singapore to conduct research on chips used in high-speed wireless communications.
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