MediaTek Inc (聯發科), the biggest handset chip supplier in China, yesterday raised its target for 4G long-term evolution (LTE) smartphone chip shipments this year by 100 percent after strong replacement demand from China and emerging markets helped boost its net profit to a record high last quarter.
In the April-to-June quarter, MediaTek’s net profit jumped 23.77 percent to NT$12.55 billion (US$418 million), from NT$10.14 billion in the previous quarter.
The figure slightly exceeded the NT$12.51 billion estimated by Credit Suisse analyst Randy Abrams and was better than the market consensus forecast of NT$11.83 billion.
MediaTek expects to ship more than 30 million 4G LTE smartphone chips this year, compared with the 15 million units it had estimated earlier this year, president Hsieh Ching-jiang (謝清江) told an investors’ conference.
The company also expects to catch up with rival Qualcomm Inc next year in developing advanced 4G LTE smartphone chips at lower costs, Hsieh said.
Shipments of LTE chips are expected to make up more than 10 percent of the company’s total smartphone chips this quarter from less than 5 percent last quarter.
Overall, MediaTek expects to ship 350 million smartphone chips this year, about 17 percent higher than the company’s previous goal of shipping 300 million units, while retaining its annual shipment target of 40 million tablet chips, Hsieh said.
Smartphone and tablet chips made up a combined 60 percent share of the chipmaker’s revenue last quarter.
“China is rapidly migrating to LTE [smartphones] from 3G phones,” Hsieh said.
The migration would speed up in the second half of this year as telecoms operators and handset makers were aggressively promoting 4G LTE phones, he said. “Stable growth in emerging markets will also provide upside momentum for MediaTek’s revenue,” he said.
Hsieh predicted that this year, as many as 150 million 3G smartphones in China would be replaced by 4G LTE devices.
About 30 to 50 percent of the smartphone chips MediaTek ships to its Chinese customers are to be re-exported to overseas markets — mostly in emerging countries — this year, Hsieh said.
MediaTek counts Lenovo Group Ltd (聯想) and TCL Communication Technology Holdings (TCL通訊) among its Chinese clients.
This quarter, the firm expects its revenue to hit a record-breaking level of between NT$56.8 billion and NT$61.2 billion, up 5 to 13 percent from last quarter’s NT$54.13 billion, Hsieh said.
However, its gross margin is likely to slide to about 48.5 percent this quarter from 49.6 percent last quarter, he added.
“The third quarter is still peak season as usual. We are seeing across-the-board growth with the strongest demand for tablet [chips],” Hsieh said.
Abrams said in a report released yesterday that a key risk in the LTE sector would be margin pressure from price competition in the market, as US computer chip giant Qualcomm Inc has streamlined its supply chain and adjusted its designs to develop lower-cost chips.
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