MediaTek Inc (聯發科), a local chip designer for CD players, DVD players and mobile handsets, said yesterday its third-quarter revenue would grow by between 22 percent and 25 percent from NT$22.32 billion (US$700 million) in the second quarter, up from a previous estimate of an 8 percent to 10 percent increase.
The company attributed the upward revision for the third quarter to stronger-than-expected handset integrated circuit (IC) sales in the so-called BRIC countries and other emerging markets, it said in a stock exchange filing yesterday. The BRIC countries are Brazil, Russia, India and China.
The revision came after the company reported its sales grew 10.12 percent to NT$9.45 billion last month from NT$8.59 billion in the previous month, the company said in a separate filing yesterday. Shares of MediaTek rose 0.29 percent to close at NT$341 on the Taiwan Stock Exchange. The stock surged as much as 4.42 percent to NT$355 in mid-session on the revision news but gave up its early gains because of overall negative market sentiment.
On Wednesday, Macquarie Securities Ltd in Taipei said in a client note that it expected MediaTek to formally upgrade its third-quarter guidance soon to a growth of 15 percent to 20 percent quarter-on-quarter. The brokerage offered a target price of NT$495 at the time.
Given MediaTek’s stronger-than-expected outlook, Citigroup yesterday placed a “buy” recommendation on the stock, saying the company remains one of its top picks in the global semiconductor sector.
But Andrew Lu (陸行之), an analyst with Citigroup Global Markets in Taipei, lowered his target price for MediaTek to NT$510 from his previous NT$525, warning that the company’s third-quarter upside performance could result in downside risks in the fourth quarter.
“Although MediaTek expects 22 percent to 25 percent quarter-on-quarter sales growth in the third quarter, we estimate real sell-through demand growth is only 10 percent to 15 percent quarter-on-quarter,” Lu said in a client note.
Given concerns on inventory build-up and pull-in production effects, MediaTek’s “third-quarter upside surprise could result in a fourth-quarter sales decline of 10 percent to 15 percent quarter-on-quarter,” the note said.
Boosted by MediaTek’s upbeat outlook, other IC design stocks also saw their shares rise yesterday in Taipei, with Richtek Technology Corp (立錡) increasing 2.39 percent to NT$214.5 and Global Unichip (創意電子) climbing 1.13 percent to NT$179. Faraday Technology Corp (智原科技) surged 3.51 percent to NT$48.7 and Realtek Semiconductor Corp (瑞昱半導體) rose 3.08 percent to NT$60.3.
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