MediaTek Inc (聯發科), the nation’s largest handset chipmaker, yesterday posted its strongest quarterly net profit in nearly three years for the second quarter, thanks to higher-than-expected demand for chips used in smartphones and tablets in China and other emerging markets.
In the quarter ending June 30, the company’s net profit surged almost 80 percent to NT$6.72 billion (US$223 million), compared with NT$3.74 billion in the previous quarter. Last quarter’s profit was the highest since the third quarter of 2010, and represented 83 percent growth from NT$3.67 billion in the same period last year.
The firm’s growth momentum is set to extend into this quarter, supported by sales of new smartphone and tablet chips, including a quad-core tablet chip, before an expected seasonal decline next quarter, MediaTek said.
“In the third quarter [of this year], all the firm’s major products will sustain growth momentum,” company president Hsieh Ching-jiang (謝清江) told an investors’ conference.
Revenue is forecast to grow by between 5 percent and 13 percent to between NT$34.9 billion and NT$37.6 billion this quarter, compared with NT$33.28 billion last quarter, Hsieh forecast. Smartphone and tablet products accounted for about 55 percent of MediaTek’s total revenues last quarter.
The revenue growth guidance exceeds Daiwa Capital Markets analyst Eric Chen’s (陳慧明) 8 percent and Credit Suisse analyst Randy Abrams’ 8.4 percent forecasts.
“Again, MediaTek is our top pick,” Chen said in a research note yesterday. “MediaTek stands out among regional tech companies in terms of results and guidance due to strong smartphone IC shipments, upward gross margin and upward average selling prices.”
Shipments of smartphone chips are set to grow about 18 percent to as many as 65 million units this quarter from 55 million units last quarter, Hsieh said, while retaining his full-year shipment target of 200 million smartphone chips for this year.
MediaTek recently added South Korea’s LG Electronics Co to its existing 40 clients that include Chinese handset vendors Levono Group Ltd (聯想) and ZTE Corp (中興).
Following strong demand, MediaTek yesterday raised its shipment forecast for its new tablet chips to between 15 million and 20 million units this year from an original target of 10 million to 15 million units.
Gross margin is set to rise to 44.5 percent this quarter from 43.2 percent last quarter, the Hsinchu-based chipmaker projected.
Hsieh said the fourth quarter would be a slow season, despite MediaTek launching new chips such as the 4G Long-Term Evolution (LTE) modem, supporting China’s TD-LTE technology, before the launch of an integrated LTE chipset in the second half of next year.
MediaTek’s revenue has traditionally declined by between 15 percent and 20 percent sequentially in the fourth quarter over the past few years, Hsieh said.
The firm also plans to launch a new eight-core chip next quarter for high-end smartphones, which it hopes would boost the company’s overall gross margin, he said.
MediaTek’s major rival Qualcomm Inc lambasted MediaTek’s alleged overstating of the performance of the eight-core chip.
“We don’t believe the best user experience is defined by the core… I don’t believe it will be a success in the market,” Qualcomm chief marketing officer Anand Chandrasekher told a teleconference on Monday.