As China migrates into the long-term evolution (LTE) telecom network, the intensifying competition in fourth-generation (4G) technology could create headwinds for LTE chipset laggards, especially MediaTek Inc (聯發科), Citigroup Global Markets Inc said yesterday.
Meanwhile, UBS Securities Ltd Taiwan Branch said as MediaTek’s time-division (TD) LTE chips are still not ready, it is unlikely that new smartphones running on the Taiwanese firm’s 4G chips would hit the market in the first half of this year.
The warnings by the two foreign brokerages have added more pressure on the company’s shares, which have dropped 5.64 percent since the beginning of the year. MediaTek shares dropped 3.01 percent to NT$418.50 at the end of trading yesterday.
Citigroup said the Taiwanese chip designer could face rising price competition in China, as China Mobile Ltd (中國移動) — the largest Chinese telecom by subscribers — is gearing up to gain ground in the country’s 4G mobile market.
“China Mobile’s decision to lower the LTE communication standards from five modes to three modes has opened opportunities for China’s local chipset makers. Also, its intention to promote and subsidize LTE phones at 1,000 yuan [US$165] creates greater competition for LTE chipset makers,” Citigroup analyst Roland Shu (徐振志) said in a client note.
Shu said the ramp-up production of mobile phones priced at about 1,000 yuan could cause MediaTek’s 3G octa-core chipsets to lose momentum on the lack of end-device price advantage and China Mobile’s subsidy of LTE phones.
As a result, MediaTek may need to aggressively lower the price of its new octa-core MT6592 chips or sell its existing octa-core LTE chipsets at a lower price than those of rivals Qualcomm Inc and Marvell Technology Group Ltd, he added.
Citigroup has downgraded MediaTek’s shares to “sell” from “neutral” and cut its share price target to NT$402 from NT$435.
UBS Securities also slashed its stock recommendation to “neutral” from “buy,” while retaining its price target at NT$425.
UBS equities and research head William Dong (董成康) said China Mobile’s aggressive plan to promote a TD-LTE platform has inspired more smartphone makers to prioritize LTE-phone development and has created fiercer competition for MediaTek.
In addition, the seasonal slowdown in the current quarter might also limit the upside for the stock in the near term, Dong said in a separate note.
However, Credit Suisse Securities Taipei branch yesterday maintained its “outperform” rating on MediaTek and increased its target price to NT$500 from NT$480, saying the company remains its preferred stock among Chinese smartphone supply-chain firms.
The brokerage said MediaTek would benefit from solid demand for communications devices in China this year and see its market share increase to 50 percent, from 45 percent in 2012.
The company will also gain the upper hand against its rivals because of a better product mix and higher selling prices with the help of high-end octa-core chips, Credit Suisse said.
To many, Tatu City on the outskirts of Nairobi looks like a success. The first city entirely built by a private company to be operational in east Africa, with about 25,000 people living and working there, it accounts for about two-thirds of all foreign investment in Kenya. Its low-tax status has attracted more than 100 businesses including Heineken, coffee brand Dormans, and the biggest call-center and cold-chain transport firms in the region. However, to some local politicians, Tatu City has looked more like a target for extortion. A parade of governors have demanded land worth millions of dollars in exchange
An Indonesian animated movie is smashing regional box office records and could be set for wider success as it prepares to open beyond the Southeast Asian archipelago’s silver screens. Jumbo — a film based on the adventures of main character, Don, a large orphaned Indonesian boy facing bullying at school — last month became the highest-grossing Southeast Asian animated film, raking in more than US$8 million. Released at the end of March to coincide with the Eid holidays after the Islamic fasting month of Ramadan, the movie has hit 8 million ticket sales, the third-highest in Indonesian cinema history, Film
Taiwan Semiconductor Manufacturing Co’s (TSMC, 台積電) revenue jumped 48 percent last month, underscoring how electronics firms scrambled to acquire essential components before global tariffs took effect. The main chipmaker for Apple Inc and Nvidia Corp reported monthly sales of NT$349.6 billion (US$11.6 billion). That compares with the average analysts’ estimate for a 38 percent rise in second-quarter revenue. US President Donald Trump’s trade war is prompting economists to retool GDP forecasts worldwide, casting doubt over the outlook for everything from iPhone demand to computing and datacenter construction. However, TSMC — a barometer for global tech spending given its central role in the
Alchip Technologies Ltd (世芯), an application-specific integrated circuit (ASIC) designer specializing in server chips, expects revenue to decline this year due to sagging demand for 5-nanometer artificial intelligence (AI) chips from a North America-based major customer, a company executive said yesterday. That would be the first contraction in revenue for Alchip as it has been enjoying strong revenue growth over the past few years, benefiting from cloud-service providers’ moves to reduce dependence on Nvidia Corp’s expensive AI chips by building their own AI accelerator by outsourcing chip design. The 5-nanometer chip was supposed to be a new growth engine as the lifecycle
RSS