MediaTek Q3 profit rose 21.4%

SMARTPHONE CHIPS::Although the fourth quarter is usually a slow season, the firm is confident that the sales momentum will continue, backed by Chinese demand

By Lisa Wang  /  Staff reporter

Tue, Oct 30, 2012 - Page 13

MediaTek Inc (聯發科), the nation’s biggest handset chipmaker, yesterday reported its best quarterly results in two years as demand for its smartphone chips exceeded its expectations amid growing sales of lower-priced smartphones in China.

Net income grew 21.4 percent annually to NT$4.94 billion (US$169 million), or NT$4.06 per share, last quarter, marking the firm’s best results since the third quarter of 2010 and compares with NT$4.07 billion, or NT$3.73 per share, in the same period last year. It also represented a sequential increase of 47.2 percent from NT$3.36 billion, or NT$2.95 a share, in the second quarter.

However, Daiwa Capital Markets analyst Eric Chen (陳慧明) said it was “slightly below” his forecast, as the 41.2 percent gross margin fell at the lower end of the company’s guidance.

It was also a result of “higher-than-expected operating expense,” which was up 16.5 percent quarterly to NT$7.9 billion, Chen said in a report issued yesterday.

Although the result lagged behind Chen’s forecast earnings per share of NT$4.57, he retained his “buy” rating on MediaTek.

As the growth momentum is expected to carry into this quarter, MediaTek again raised its smartphone chip shipment target to 110 million units, from the 95 million units it estimated three months ago.

Benefiting from this smartphone demand, “there will be less impact from seasonal factors in terms of revenue,” although the fourth quarter is historically a slow season, MediaTek president Hsieh Ching-jiang (謝清江) told investors.

Revenue this quarter is expected to fall between NT$28.9 billion and NT$30.9 billion, he said.

That implies, at worst, 2 percent sequential contraction and, at best, 5 percent growth from last quarter’s NT$29.47 billion.

MediaTek’s revenue forecast is more optimistic than Credit Suisse analyst Randy Abrams’ projection of NT$27.57 billion, or a 6 percent decline.

A new wave of replacement demand for smartphones in China boosted shipments of MediaTek’s smartphone chips to between 35 million and 40 million units last quarter, surpassing the chipmaker’s forecast of 30 million units, the company said.

Smartphone chips were the biggest revenue source last quarter, accounting for 40 percent of the total, data showed.

Shipments of smartphone chips in the current quarter would exceed 40 million units, Hsieh said.

Demand for smartphone chips supporting TD-CDMA technology developed by China would be the strongest, he said.

The company’s chips have been qualified by major Chinese handset brands Huawei Technologies Co (華為), ZTE Corp (中興) and Lenovo Group (聯想), he said.

Gross margin is expected to be about 42 percent this quarter, little changed from last quarter’s 41.2 percent, as handset chip prices are expected to drop between 5 percent and 15 percent quarter-on-quarter because of growing pricing competition from Qualcomm Inc and Spreadtrum Communications Inc.