As the initial market response to its new 5G system-on-chip (SoC) solutions appears to be positive, 5G represents an opportunity for MediaTek Inc (聯發科) to increase the average selling prices (ASPs) of its products and boost its earnings, analysts said.
Moreover, MediaTek is likely to see its 5G SoC solutions gain better traction among Chinese smartphone original equipment manufacturers (OEMs) beginning next year, they said.
“MediaTek’s 5G SoC development is on schedule and should pave the way for its smooth transition into the 5G era in 2020 and let it capture demand tied to the coming 5G-driven handset replacement cycle,” SinoPac Securities Investment Service Corp (永豐投顧) said in a research note released on Monday.
“The de-Americanization of Chinese vendors’ supply chains would also help boost its handset SoC shipments and stabilize its market share,” SinoPac said.
MediaTek is planning to mass-produce its first 5G SOC product in March next year, making it one of the world’s leading suppliers of 5G chips.
MediaTek’s shipments of 5G chips are likely to reach 30 million units next year and grow to 75 million units in 2021, Credit Suisse Group AG said in a report on Tuesday.
China’s Oppo Mobile Telecommunications Corp (歐珀), Vivo Communication Technology Co (維沃) and Xiaomi Corp (小米) are likely to become MediaTek’s major clients for 5G chips next year, while Huawei Technologies Co (華為) and Samsung Electronics Co might increase their orders in 2021, Credit Suisse said.
While 5G opportunities look good from next year onward, aggressive 5G pricing from Qualcomm Inc or a slower 5G adoption rate in China due to trade disputes with the US might pose potential risks for MediaTek, analysts said.
The company on Wednesday reported that its revenue increased 1.95 percent month-on-month and 1.69 percent year-on-year to NT$23.49 billion (US$761.43 million) last month, the most in 13 months.
Last month’s revenue growth helped lift the company’s third-quarter revenue to NT$67.22 billion, which was in line with the revenue forecast of NT$65.3 billion to NT$70.2 billion that MediaTek made in July.
In the first three quarters of the year, total revenue reached NT$181.51 billion, an increase of 2.45 percent compared with NT$177.17 billion in the same period last year.
So far this year, MediaTek’s sales were evenly distributed amid the company’s three major business segments — mobile computing; growth solutions, including Internet of Things and power management IC; and mature solutions such as television SoC — and all three segments’ ASPs and gross margins expanded from a year earlier, SinoPac said.
SinoPac gave MediaTek a long-term “buy” rating with a target stock price of NT$490, which was set based on a price-to-earnings ratio of 25, compared with its previous target price of NT$366 based on a price-to-earnings ratio of 22.
Credit Suisse maintained its “outperform” rating on the stock, but raised its target price on MediaTek from NT$365 to NT$440, and forecast earnings per share of NT$19.71 for next year.
MediaTek shares closed at NT$372 on Wednesday in Taipei trading. The stock has risen 62.09 percent since the beginning of this year, outperforming the broader market’s 11.95 percent increase over the period.
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s biggest contract chipmaker, booked its first-ever profit from its Arizona subsidiary in the first half of this year, four years after operations began, a company financial statement showed. Wholly owned by TSMC, the Arizona unit contributed NT$4.52 billion (US$150.1 million) in net profit, compared with a loss of NT$4.34 billion a year earlier, the statement showed. The company attributed the turnaround to strong market demand and high factory utilization. The Arizona unit counts Apple Inc, Nvidia Corp and Advanced Micro Devices Inc among its major customers. The firm’s first fab in Arizona began high-volume production
VOTE OF CONFIDENCE: The Japanese company is adding Intel to an investment portfolio that includes artificial intelligence linchpins Nvidia Corp and TSMC Softbank Group Corp agreed to buy US$2 billion of Intel Corp stock, a surprise deal to shore up a struggling US name while boosting its own chip ambitions. The Japanese company, which is adding Intel to an investment portfolio that includes artificial intelligence (AI) linchpins Nvidia Corp and Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), is to pay US$23 a share — a small discount to Intel’s last close. Shares of the US chipmaker, which would issue new stock to Softbank, surged more than 5 percent in after-hours trading. Softbank’s stock fell as much as 5.4 percent on Tuesday in Tokyo, its
COLLABORATION: Softbank would supply manufacturing gear to the factory, and a joint venture would make AI data center equipment, Young Liu said Hon Hai Precision Industry Co (鴻海精密) would operate a US factory owned by Softbank Group Corp, setting up what is in the running to be the first manufacturing site in the Japanese company’s US$500 billion Stargate venture with OpenAI and Oracle Corp. Softbank is acquiring Hon Hai’s electric-vehicle plant in Ohio, but the Taiwanese company would continue to run the complex after turning it into an artificial intelligence (AI) server production plant, Hon Hai chairman Young Liu (劉揚偉) said yesterday. Softbank would supply manufacturing gear to the factory, and a joint venture between the two companies would make AI data
The Taiwan Automation Intelligence and Robot Show, which is to be held from Wednesday to Saturday at the Taipei Nangang Exhibition Center, would showcase the latest in artificial intelligence (AI)-driven robotics and automation technologies, the organizer said yesterday. The event would highlight applications in smart manufacturing, as well as information and communications technology, the Taiwan Automation Intelligence and Robotics Association said. More than 1,000 companies are to display innovations in semiconductors, electromechanics, industrial automation and intelligent manufacturing, it said in a news release. Visitors can explore automated guided vehicles, 3D machine vision systems and AI-powered applications at the show, along
RSS