MediaTek reports best recent quarter

THREE-YEAR HIGH::MediaTek is hoping fourth-quarter trends will not hold sway this year as it predicts sales of new chips may weaken the seasonal trend of loss

By Lisa Wang  /  Staff reporter

Sat, Nov 02, 2013 - Page 13

MediaTek Inc (聯發科), the nation’s biggest handset chip supplier, yesterday posted the strongest quarterly profit in about three years for last quarter, primarily boosted by demand for smartphones in China and emerging markets.

The Hsinchu-based company gave an encouraging outlook for the current quarter to sustain last quarter’s growth momentum.

“The seasonal weakness in the fourth quarter will not be as evident as before, offset by sales of new chips,” MediaTek president Hsieh Ching-jiang (謝清江) told a teleconference.

Revenue is expected to be flat or to slide by 5 percent sequentially to between NT$37 billion and NT$39 billion (US$1.26 billion and US$1.32 billion), compared with NT$37 billion last quarter, Hsieh said. Smartphone chips made up about 60 percent of MediaTek’s total revenue last quarter.

The forecast is much better than expected as MediaTek posted a quarterly decline of 15 percent on average in the fourth quarter over the past five years.

It also surpassed the NT$34.33 billion estimated by Credit Suisse analyst Randy Abrams. Daiwa Capital Markets analyst Eric Chen (陳慧明) expected MediaTek to guide a single-digit percentage point sequential decline in revenue.

The positive outlook may be due to Chinese brands’ aggressive plan to launch more new handsets this quarter, Abrams said.

MediaTek last quarter added Xiaomi Corp (小米) to its more than 40 clients, which include Lenovo Group (聯想), ZTE Corp (中興) and LG Electronics Co.

This quarter, MediaTek plans to ship new octa-core smartphone chips and to see broad adoption of its cost-effective quad-core chips, Hsieh said. The firm also plans to launch 4G long-term evolution (LTE) chips at the end of this year, he said.

Overall gross margin is expected to stay in the range of between 43 percent and 45 percent this quarter, compared with last quarter’s 43.9 percent, as the company aims to boost higher-margin quad-core smartphone chip shipments to account for 40 percent of total smartphone chips, up from 30 percent last quarter, Hsieh said.

MediaTek expects to ship 65 million units of smartphone chip this quarter, on a par with the previous quarter. For the whole of this year, total smartphone chip shipments are likely to surpass the firm’s target of 200 million units for this year, doubling last year’s 108 million units, he said.

During the three-month period ending in September, net profit leapt 25.3 percent to NT$8.42 billion, compared with NT$6.72 billion in the previous quarter,and better than Daiwa’s estimate of NT$8.34 billion. On an annual basis, that was a 71.2 percent growth from NT$4.92 billion.

Inventory in last quarter reduced to NT$12.94 billion, or 50 days, compared with NT$10.96 billion, or 57 days, a quarter ago, MediaTek chief financial executive David Ku (顧大為) said, citing better-than-expected demand last quarter.

Meanwhile, Mstar Semiconductor Inc (晨星半導體), the world’s biggest supplier of chips used in flat-panel TVs, yesterday posted 36 percent sequential growth for third-quarter net profit to NT$1.48 billion, boosted by seasonal demand. Gross margin stood at 45.3 percent.

MStar is set to be merged with MediaTek next year.

In the first three quarters of this year, MStar’s net profit rose 2.54 percent to NT$3.63 billion from NT$3.54 billion a year ago. Gross margin improved to 44.55 percent from 40.12 percent year-on-year.

Revenue slid 12 percent to NT$24.6 billion in the first three quarters of this year, from NT$27.99 billion in the prior year, company data showed.