Fri, Sep 13, 2013 - Page 13 News List

New chips to boost MediaTek’s share of Chinese market

CHIPPING AWAY:The new octa-core chips will help Chinese smartphone makers gain access to the mid-range and high-end, large-screen segments

By Lisa Wang  /  Staff reporter

MediaTek Inc (聯發科), which supplies handset chips to the world’s biggest telecom, China Mobile (中國移動), is expected to take half of China’s smartphone chip market next year, benefiting from the quick uptake of its new octa-core chips used in high-end and mid-range smartphones, Daiwa Capital Markets forecast yesterday.

The gain in market share would help MediaTek widen the gap in its leadership of the Chinese market, the world’s largest. This year, MediaTek is expected to seize a 48 percent share of the Chinese market, Daiwa said.

Meanwhile, major rival Qualcomm Inc is expected to see its market share shrink to 25 percent next year from this year’s 30 percent due to a lack of competitive products in the second half of this year, Daiwa analyst Eric Chen (陳慧明) said in a report.

“On a recent trip to China, we got the impression that MediaTek’s octa-core smartphone IC had been well received. Given this, octa-core ICs could become mainstream [smartphone chips] in China by 2014,” Chen said.

As the octa-core Cortex A7 MT6592 delivers an impressive clock speed of between 1.7 gigahertz and 2 gigahertz and has low power consumption, the chip would help Chinese smartphone makers gain access to the mid-range and high-end large-screen market segment, as well as helping MediaTek boost its global orders, Chen said.

MediaTek said last month that it plans to ramp up production of the new octa-core chip next quarter.

The firm’s new cost-efficient quad-core smartphone processors, code-named the MT6582 and the MT6588, would also help the chipmaker expand its market share in China, Chen said.

The quad-core chips, one for low-end smartphones and another for mid-range models, are expected to launch next quarter, Chen said.

MediaTek is expected to grow its handset shipments by about 44 percent to 300 million units next year, compared with this year’s 208 million units, Chen said.

MediaTek also supplies handset chips to China’s Xiaomi Corp (小米), Lenovo Group (聯想) and ZTE Corp (中興).

This quarter, MediaTek is expected to grow its revenue by 16 percent quarter-on-quarter, a faster pace than the company’s forecast of between 5 percent and 13 percent growth, to between NT$349 billion and NT$376 billion, Chen said.

Net income is expected to increase 24 percent this quarter to NT$8.34 billion, Chen said.

Chen retained his “buy” rating on MediaTek, with a target price of NT$430. That implies a 15 percent upside from the stock’s closing price of NT$374 yesterday.

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