Wed, Nov 01, 2006 - Page 11 News List

MediaTek's Q3 earnings soar

HANDSETS LEAD THE WAY The Hsinchu-based chipmaker's diversification into cellphone devices has fattened its income


MediaTek Inc (聯發科), the world's biggest maker of chips used in DVD players, yesterday reported record-high quarterly earnings for the third quarter, boosted by new customers' demand for mobile phone chips.

Net income jumped 16 percent to NT$6.5 billion (US$195.6 million), in the quarter ending on Sept. 30, compared to NT$5.96 billion earned a year ago in the same period. Gross margin jumped 2.1 percent to 57.8 percent last quarter from 55.7 a year ago, the company said.

"The results beat most analysts' estimates but are slightly lower than my expectations," said Eric Chen (陳慧明), a semiconductor industry analyst with BNP Paribas Securities based in Taipei.

Revenue expanded 25 percent quarter on quarter, rather than the 26 percent projected by Chen.

Improvement in MediaTek's handset business boosted the third-quarter gross margin and therefore the overall profits, he said.

The Hsinchu-based chipmaker started to diversify into the handset chip business several years ago. The new business accounted for about 40 percent of MediaTek's total revenue of NT$15.05 billion last quarter, according to Chen's forecast.


MediaTek is expected to give its outlook for the current quarter during an investor's conference tomorrow.

As the growth momentum is ex-pected to carry into the current quarter on seasonal demand, Chen said he expected MediaTek to say revenue would grow another 5 percent from last quarter and that the historical high gross margin would be sustained.

Based on that, earnings per share would rise further to NT$6.74 this quarter, bringing the overall earnings per share to NT$23.15 for this year, Chen said.

MediaTek earned NT$21.31 a share last year.


Chen said last month that he had retained his "buy" call on MediaTek in expectation of gaining more share in the world's handset chip market.

The target price is also unchanged at NT$388, implying around 20 percent upside from MediaTek's closing price of NT$324 yesterday on the main bourse.

MediaTek said in August it planned to supply new handset chips to certain European telecom operators, and new chips for phones enabling 2.75-generation technologies to new customers last quarter.

In addition, the company also said it planned to begin shipping its first chips for fixed wireless phones in the third quarter.

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