MediaTek Inc (聯發科), the nation’s biggest handset chip designer, expected gross margin to rebound in the third quarter, bolstered by the launch of new higher-priced chips later this year including chips supporting China’s 3G, or TD-SCDMA, technology, said an analyst who attended an investor meeting yesterday.
In a downward spiral over the past five quarters, MediaTek’s gross margin fell to 49.2 percent in the final quarter of last year and would drop further to as low as 45 percent this quarter primarily because of intensifying competition from China’s Spreadtrum Communications Inc (展訊) and Taiwan’s MStar Semiconductor Inc (Cayman) (開曼晨星半導體), compared with 58.7 percent in the fourth quarter of 2009.
In an investor conference only open to analysts yesterday, MediaTek unveiled a detailed product roadmap, said Eric Chen (陳慧明), a semiconductor analyst with Daiwa Capital Market based in Hong Kong, in a research note issued after the five-hour meeting.
“MediaTek’s strategy is clear — smartphone IC business,” Chen said in the research note.
The company was targeting -entry-level and middle-range smartphone markets, he said.
The Hsinchu-based chip company was ramping up shipments of its 3.75G chips for smartphones powered by the Android system and is scheduled to ship TD-SCDMA chips in the third quarter, Chen said.
MediaTek said shipments of smartphone chips would be around 3 million units in the first half of this year, according to the research note, which was slightly lagging behind the chipmaker’s target of shipping 10 million units this year.
The chip designer also planned to launch new cost-saving chips for feature phones supporting second-generation telecoms technology later this year, Chen said.
For the long term, MediaTek aimed to safeguard its gross margin at 50 percent, he said.
Chen retained his sell rating on MediaTek as the mobile phone chip designer would see only gradual contributions from the smartphone news this year, which would make it unlikely to offset a further contraction in gross margin in the near and middle term because of the political turmoil in the Middle East, which dampened demand.
MediaTek’s smartphone chips would make up a minimal portion, or 2 percent, of the company’s goal of shipping more than 550 million mobile phone chips.
MediaTek said it planned to retain its payout ratio as it did over the past year, which means it could pay about 80 percent of its net income to shareholders almost totally by delivering a cash dividend.
Separately, MStar, the world’s largest LCD TV chip designer, said it is considering raising its cash dividend this year to align with the growing trend of delivering more cash over stock to shareholders, MStar co-founder and chairman Wayne Liang (梁公偉) said yesterday.
MStar, which launched an initial public offering in Taiwan in December, posted NT$6.52 billion (US$220 million), or NT$14.69 per share, in net profits, for last year.
Last year, MStar delivered a higher percent of its dividend in the form of stock than its peers, with NT$3 per share in cash dividend and NT$2 in stock dividend based on net income of NT$4.82 billion, or NT$12.98 per share, in 2009.
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