Wed, Aug 10, 2011 - Page 12 News List

MStar posts better-than-expected profit

SOLID NEWCOMER:After entering the mobile phone chip market less than two years ago, MStar expects the move to further boost its revenue, along with LCD TV chips

By Lisa Wang  /  Staff Reporter

MStar Semiconductor Inc (Cayman) (開曼晨星半導體), the world’s biggest chipmaker for LCD TVs, yesterday posted better quarterly profits than expected, saying it expected revenues to grow by up to 10 percent quarterly on the back of robust demand for chips used in mobile phones and TVs.

Revenues would expand to between US$303 million and US$318 million in the current quarter compared with US$289 million last quarter, during which TV chips made up about 75 percent of the total and handset chips made up less than 10 percent.

“We believe demand for our LCD TV chips will grow in the third quarter, but the [weak] macroeconomic conditions in the US and Europe have cut our growth rate to below the seasonal average,” company chairman Wayne Liang (梁公偉) told an investors’ conference.

Market researcher DisplaySearch trimmed its forecast of global LCD TV shipments to 210 million units this year, from a previous estimate of 217 million, given stagnant demand in developed countries.

Net income grew 3.5 percent to NT$1.51 billion (US$52 million), in the second quarter, compared with NT$1.46 billion in the same period of last year. The quarterly net profits beat the NT$1.4 billion estimated by Samsung Securities, according to a report dated July 18.

Compared with a quarter ago, net profits grew about 5.5 percent from NT$1.43 billion.

Gross margin improved to 42.5 percent last quarter, which hit the highest level in a year, beating the 41.4 percent figure predicted by Samsung Securities and the 42 percent forecast by the chip designer in May. Gross margin is expected to drop to between 40 percent and 42 percent this quarter, MStar forecast.

This quarter, MStar said it planned to ship new chips used in smart TVs powered by the Android operating system to its Chinese customers, Liang said. The company also plans to launch new high-end chips for feature phones, dubbed 8536N, before shipping high-margin chips for 3G smartphones by year-end, Liang said.

Shipments of handset chips would grow 30 percent to 50 percent this quarter from last quarter and the growth momentum would extend into the final quarter of this year, Liang said.

“We feel the growth momentum for our chips is very strong now,” Liang said. “Our handset chip shipment will certainly grow further based on the forecast of our customers. And they have factored in the economic downturn.”

For all of this year, shipments of cellular phone chips would reach between 40 million and 60 million units, Liang said.

MStar diversified into the mobile phone chip market less than two years ago, taking on the nation’s top handset chip designer Mediatek Inc (聯發科).

Shares of MStar dropped for the fourth consecutive trading day to NT$115 after losing 2.54 percent yesterday, while Mediatek advanced 6.93 percent yesterday to NT$247.

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