Sat, Mar 03, 2012 - Page 12 News List

Barclays expects MediaTek’s Q1 sales to fall 15%

ADJUSTMENTS:While sales value might drop because of slow 2G phone chip sales, gross margins could improve because of a better product mix

By Amy Su  /  Staff Reporter

Barclays Capital has revised downward its forecast for Mediatek Inc’s (聯發科) sales in the first quarter amid slower demand for 2G feature phone chips.

However, weaker sales of the 2G phone chips, a low-margin product, could mean better margins for MediaTek, the nation’s biggest mobile-phone chip designer, Barclays said in a report issued on Thursday.

The brokerage now forecasts a first-quarter gross margin of 44 percent, slightly up from its prior forecast of 43 percent.

“Supply chain check suggests weaker [first-quarter] sales, but better margins [for MediaTek],” Barclays Capital analyst Andrew Lu (陸行之) said in the report.

MediaTek’s guidance for weaker 2G phone chip sales was consistent with comments made by its peers and some 2G LCD driver IC vendors, Lu said.

As such, Barclays adjusted its first-quarter sales forecast to a sequential drop of 15 percent to NT$19.2 billion (US$651.7 million). Its prior forecast was a drop of 10 to 15 percent.

As for last month, Barclays expects MediaTek’s sales to reach NT$6 billion to NT$6.2 billion, up 15 to 20 percent from January. That compares with consensus forecasts of NT$6.5 billion to NT$6.7 billion and growth of 25 to 30 percent.

Sales of MT6575 IC products, MediaTek’s 3G platform for entry to middle-level Android smartphones, are expected to exceed 15 percent of the company’s smartphone IC shipment target of 8 million to 10 million units in the first quarter, Lu said.

For the full year, Barclays expects sales of MT6575 and dual-core MT6575T IC products to account for nearly 70 percent of the company’s shipment target for chips using 50-nanometer process technology. That should drive up margins on a quarterly basis starting from the second quarter.

MediaTek shares rose 3.79 percent to close at NT$315 on the local bourse yesterday, outpacing the benchmark index’s 0.32 percent increase, stock exchange data showed.

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