Thu, Jan 09, 2014 - Page 13 News List

MediaTek beats expectations with growth last quarter

REVENUE RISES:The firm’s revenue rose to NT$39.8 billion last quarter, although it is expected to decline 10 percent this quarter as it has done for the past three years

By Lisa Wang  /  Staff reporter

MediaTek Inc (聯發科), the nation’s biggest handset chipmaker, yesterday posted 2 percent sequential growth in revenue for last quarter on strong demand for smartphones and tablets in China, exceeding the company’s expectation of a flattish quarter at best and analysts’ expectations.

Revenue expanded to NT$39.8 billion (US$1.32 billion) in the quarter ending on Dec. 31, compared with NT$39.01 billion in the third quarter last year.

MediaTek forecast in October that revenue would fall between NT$37 billion and NT$39 billion, saying that the launch of new smartphone chips, including octa-core chips and tablet chips, would help boost revenue above seasonal levels in the normally slack period.

“The company’s strength is from stronger shipments of its dual core chipset, growing traction at the smaller Chinese branded companies and ramp of exports,” Credit Suisse analyst Randy Abrams said in a report released yesterday.

SMARTPHONE SALES

MediaTek, which seized more than 40 percent of China’s mobile phone chip market, generated about 60 percent of its revenue from selling smartphone chips.

MediaTek’s fourth-quarter revenue slightly surpassed the NT$39.66 billion estimated by Abrams and the NT$38.84 billion estimated by Daiwa Capital Markets analyst Eric Chen (陳慧明).

MediaTek was expected to ship more than 75 million smartphone chips last quarter, higher than its guidance of 65 million units, Chen said.

Looking forward, MediaTek could perform better than seasonal patterns on the back of a higher average selling price and orders extended from last quarter, he said.

DECLINE PREDICTED

MediaTek may post a 10 percent quarterly decline in the current quarter, Chen projected.

Over the past three years, revenue fell 12 percent sequentially in the first quarters.

For the whole year, Chen and Abrams forecast MediaTek to benefit from demand for its new octa-core chips, despite the introduction of TD-LTE chips by rivals Qualcomm Inc and Marvell Technology Group in China.

“We view LTE [adoption] is still too early in the first half of 2014,” Abrams said, given spotty base station deployment by China Mobile Ltd (中國移動) and expensive LTE phone prices.

Credit Suisse expected there would be 24 million LTE subscribers in China this year, well below the 100 million targeted by China Mobile.

“We remain positive on MediaTek’s growth opportunity in 2014 from both volume gains and support from octa-core on pricing,” Abrams said.

‘OUTPERFORM’

Abrams retained his “outperform” rating for MediaTek. He set a target price of NT$500, implying about a 23 percent upside from the chipmaker’s stock price, which closed at NT$407 yesterday. Chen also retained his “buy” call on the stock, with target price of NT$526.

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