Thu, Jul 28, 2011 - Page 12 News List

MediaTek net income gains a notch from last quarter

By Lisa Wang  /  Staff Reporter

MediaTek Inc (聯發科), the nation's top handset chip designer, yesterday posted a slight increase in its net income for last quarter from the previous quarter on the back of stronger-than-expected demand for its new low-cost mobile phone chips.

Net income rose 0.5 percent to NT$3.33 billion (US$116 million) in the second quarter, from NT$3.31 billion in the first quarter. On an annual basis, that represented a decline of 63.2 percent from NT$9.03 billion as demand for handsets dwindled.

Gross margin slid to 45.9 percent last quarter, from 46.2 percent in the first quarter, compared with 55 percent last year. Gross margin would be between 44 and 46 percent this quarter because of a price drop and rising shipments of low-margin handset chips, MediaTek said.

“Seasonal demand will have a positive impact on revenues from handset and digital TV chips,” company president Hsieh Ching-jiang (謝清江) said in a teleconference with investors.

Revenues this quarter are expected to grow by between 5 and 10 percent to between NT$22 billion and NT$23 billion, from NT$20.98 billion in the April-to-June period, Hsieh said.

He said mobile phone chips made up as much as 75 percent of last quarter's total revenues.

The revenue expansion fell short of Credit Suisse's expectation of 10 percent and Daiwa Capital Markets' 14 percent.

However, MediaTek yesterday said that it had made encouraging progress in developing new mobile phone chips, including new 3G smartphone chips.

MediaTek will start supplying 3G smartphone handset chips to China's Lenovo Group Ltd (聯想) this quarter and some customers are using MediaTek technology to design their own products, which will also help the company secure orders, Hsieh said.

“We are impressed at its earlier-than-expected new 3G smartphone shipments in the fourth quarter of 2011,” Daiwa Capital Markets analyst Eric Chen (陳慧明) said in an investment note issued yesterday.

MediaTek aims to ship 10 million smartphone chips this year.

The chip designer has also recently secured orders for 2G chips from Motorola Inc and China's Huawei Technologies Co (華為), Hsieh said.

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