Wed, May 22, 2013 - Page 14 News List

CLSA raises MediaTek Inc target price

Staff writer, with CNA

MediaTek Inc (聯發科), Taiwan’s largest handset chip designer, is expected to post stronger revenue growth next quarter thanks to lower-priced chips and improving production capacity, CLSA Global Markets said on Monday.

The Hong Kong-based brokerage revised its forecast for MediaTek’s third-quarter sequential revenue growth to 24 percent, up from its previous forecast of 13 percent.

That means MediaTek will likely ship 80 million smartphone chips in the third quarter, up from CLSA’s earlier projection of 65 million.

“We expect aggressive pricing [of chips] helped by better cost structure to trigger strong demand,” CLSA analyst Cheng Chao-kang (鄭兆剛) wrote in a research note.

“Secondly, MediaTek has secured enough foundry and backend capacity to ship over 15 million units of the MT6572 chip per month in the third quarter,” he said.

Cheng added that MediaTek will likely price its new dual-core smartphone integrated circuit (IC), the MT6572, at US$5.50 to US$6.50 from late next month, which will be lower than the US$8 to US$9 the chip designer charges for its current solution, the MT6577.

Moreover, he believes MediaTek will be able to build business ties with all major Android tablet makers in the second half of this year except for Samsung Electronics Co of South Korea.

Given weaker competition in the tablet IC space, it would not be surprising to see MediaTek secure more than a 50 percent share of the non-Apple/Samsung tablet market starting in the second half of next year, he said in the note.

CLSA maintained a “buy” rating on the stock and raised its forecast for MediaTek’s earnings per share for this year by 4 percent to NT$19.07 and for next year by 3.8 percent to NT$23.28.

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