Wed, May 11, 2011 - Page 12 News List

Flat revenues or 6% growth, MStar says

By Lisa Wang  /  Staff Reporter

MStar Semiconductor Inc (Cayman) (開曼晨星半導體), the world’s biggest chipmaker for flat-panel TVs, said revenues would either be flat or grow by up to 6 percent this quarter backed by growth in its new handset chip business.

Revenues are expected to be flat this quarter at between US$280 million and US$297 million, or to grow by 6 percent from last quarter’s US$280 million, when mobile phone chips made up more than a 5 percent share, company chairman Wayne Liang (梁公偉) told an investors’ conference.

Last quarter, net income decreased 20.4 percent year-on-year, or 8.8 percent quarter-on-quarter, to NT$1.43 billion (US$49 million), or NT$2.97 a share. The company made a profit of NT$1.8 billion, or NT$3.75 a share, a year ago and NT$1.57 billion, or NT$3.27 per share, in the fourth quarter of last year.

As mobile phones are overtaking other mobile devices, including notebook computers, MStar’s handset chip development became the focus for investors yesterday.

Just one year after it entered the market, MStar now supplies its chips to more than 40 customers, mostly in China.

This quarter, mobile phone chips shipments are expected to grow by between 30 percent and 50 percent quarter-on-quarter, the same growth rate as last quarter. MStar will begin shipping a new cost-efficient chip, dubbed the 8532, this month at the earliest, Liang said.

RIVALRY

MStar is following in the steps of bigger local rival MediaTek Inc (聯發科) in offering low-cost handset chips to vie for a bigger market share. MediaTek started shipping such chips last quarter in an attempt to recoup some turf.

“We offer totally the same specifications [for cost-efficient handset chips] as our competitors,” Liang said.

On its pricing strategy, Liang said it “will depend on if cutting prices will help us gain more share,” implying that MStar could spark a price war to build a stronger market standing.

Gross margin is expected to slide a bit to between 40 percent and 42 percent this quarter, from 41.3 percent last quarter, as the firm expects to ship more handset chips, which have a gross margin below the corporate average.

UNCERTAIN MARKET

In contrast to the fast growth in the handset chip business, shipments of MStar’s core TV chips, which accounted for 70 percent of MStar’s total revenues, would be little changed because of seasonally slack demand, Liang said.

“[TV] customers are uncertain about market demand because of turmoil in North Africa, the Middle East and the earthquake in Japan. Orders from [TV] customers are short of our expectations, but … we still expect [demand] to pick up in the third quarter, following the usual seasonal pattern,” Liang said.

MStar shares fell 1.85 percent to NT$238.5 yesterday, while -MediaTek shares plunged 2.08 percent to NT$352.5.

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