MediaTek Inc (聯發科), the nation’s biggest handset chip supplier, yesterday posted its best quarterly net profit in eight quarters, helped by robust demand in emerging markets such as China and India. However, it forecast a weaker quarter ahead.
In the quarter ending Sept. 30, MediaTek’s net income jumped 64.2 percent to NT$11.8 billion (US$363 million), or NT$10.99 per share, compared with NT$7.18 billion, or NT$6.69 a share, in the same period last year, the company said in a statement. On a quarterly basis, that represented growth of 28.8 percent.
This quarter, MediaTek expects revenue to drop by between 13 percent and 19 percent from the third quarter’s NT$34.36 billion because of weakening handset demand from China and more aggressive price cuts.
The revenue forecast is lower than most analysts’ projection, ranging from a decline of 9 percent to 14.9 percent quarter-on-quarter.
Company president Hsieh Ching-jiang (謝清江) told a teleconference yesterday that price cuts were a “normal occurrence” and had not been prompted by competition from “certain” rivals.
“We want to enhance long-term partnerships with customers by sharing ... our achievements in cost reduction this year,” Hsieh added.
The Hsinchu-based company said that the rate of price reductions for the full year would be the same as last year’s at 15 percent.
The price adjustment would slightly erode gross margin, which is expected to fall to 59.1 percent in the final quarter of this year, from a record high of 60.2 percent in the second quarter, Hsieh said.
Deutsche Securities analyst Michael Chou (周立中) disagreed, saying: “It is not just the seasonal effect.”
Chou said in a report that MediaTek was lowering prices amid intensifying competition, adding that: “Our surveys suggest that handset chip customers are starting to cut orders [to MediaTek] for October on weaker-than-expected demand and order shifts to Spreadtrum.”
Spreadtrum Communications Inc, established in 2001, is a Chinese handset chip designer based in Shanghai.
Chou has a “sell” rating on MediaTek.
Separately, MediaTek said it expected to wrap up patent licensing talks with US handset chipmaker Qualcomm Inc by the end of this year, which would facilitate the shipment of chips used in mobile phones running on the WCDMA system.
MediaTek retained its target shipments of more than 300 million handset chips this year.
Handset chips accounted for more than 70 percent of the company’s third-quarter revenue.
Shares of MediaTek dropped 1.38 percent to NT$465 yesterday, underperforming the benchmark TAIEX, which edged down 0.21 percent.
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