MediaTek reports smaller sales dip on China demand

By Lisa Wang  /  Staff reporter

Sat, Jul 06, 2013 - Page 13

MediaTek Inc (聯發科), the nation’s biggest handset chip supplier, yesterday reported a slower-than-expected 10.59 percent decline in revenue last month amid robust demand for low-cost smartphones in China, allowing the company’s revenue last quarter to surpass its forecast.

Revenue fell to NT$9.77 billion last month, compared with NT$10.93 billion in May. That brought the company’s April-to-June revenue to NT$33.27 billion, up 38.8 percent from the first quarter’s NT$23.97 billion, and higher than the NT$30 billion to NT$31.6 billion MediaTek projected in May.

The quarterly growth was “better than our expectation of 33 percent quarter-on-quarter growth,” Daiwa Capital Markets analyst Eric Chen (陳慧明) said in a research report yesterday.

“We believe Mediatek’s revenue growth for the third quarter could surprise the market positively and ease concerns about a potential top-line slowdown following strong growth in the second quarter,” Chen said.

Chen expects MediaTek’s revenue to grow 15 percent sequentially in the three-month period ending September, with chip shipments rising 20 percent to 60 million units from last quarter’s 50 million units.

“IC orders from China in the third quarter could be aided by the upcoming high season, which runs from the Golden Week [holiday in October] to the Lunar New Year,” Chen said.

Mediatek’s new dual core MT6572 chip has seen a significant pickup with the entry of more smartphone models over the past few weeks, including Sony’s low-end Xperia C and those from its usual customers, Huawei Technologies (華為), ZTE (中興) and Lenovo Group (聯想), Credit Suisse analyst Randy Abrams said in a report released yesterday.

Abrams raised his earnings forecast for MediaTek in light of the stronger-than-expected momentum. He expects MediaTek to make NT$7.04 billion, or NT$5.26 per share, in net profit for last quarter, rather than the NT$6.49 billion, or NT$4.84 per share, he estimated earlier.

He also increased his projection for MediaTek’s revenue to NT$35.62 billion this quarter, from NT$34.21 billion, implying growth of 7 percent from the previous quarter.

Abrams retained his “outperform” rating on MediaTek, with a target price of NT$400. Daiwa Capital’s Chen also maintained his “buy” rating on the chip supplier, with a target price of NT$415, implying a 20 percent upside from yesterday’s close of NT$345.50.

The stock jumped 4.7 percent yesterday, outperforming the TAIEX’s 1.37 percent gain.