MediaTek Inc (聯發科) yesterday posted its lowest quarterly earnings in about six years on fierce price competition, but the nation’s largest mobile phone chip designer said revenues would grow by as much as 12 percent this quarter, greatly exceeding some analyst predictions.
The firm said gross margin would stabilize at a range of between 45 percent and 47 percent during the current quarter, compared with 46.2 percent last quarter after losing an accumulated 14 percentage points over the past one-and-half years from 60.2 percent in the third quarter of 2009.
Credit Suisse and Daiwa Capital Markets had predicted MediaTek’s gross margin would drop between one percentage point and 1.5 percentage points at a quarterly pace in the April-to-June period.
“The launch of new products and a slower decline in blended average selling price helped buoy gross margin,” company president Hsieh Ching-jiang (謝清江) said during a teleconference with investors.
Hsieh expected the average selling price to fall by a low single digit percent quarter-on-quarter.
MediaTek started shipping its new-generation cost-efficient single chip for high-end feature phones — code-named MT6252 chips — to customers last month and expected the chips to account for a third of its overall shipments of handset chips supporting second--generation technology next quarter, rising to 40 percent by the end of the year, Hsieh said.
The company is set to ship its first chips supporting 2.75-generation smartphones running on the Android system this quarter and plans to ship third-generation smartphone chips in July, Hsieh said, adding that the company would stick to its goal of shipping 10 million smartphone chips this year.
Last quarter, net income plunged 70.3 percent to NT$3.31 billion (US$115 million), or NT$3.03 a share, from NT$11.13 billion, or NT$10.19 per share, a year earlier, making the first quarter the company’s weakest quarter since the first quarter of 2005, when MediaTek posted NT$2.84 billion in net income.
On a quarterly basis, first-quarter net profits declined 13.5 percent from NT$3.83 billion, or NT$3.51 per share.
This quarter, revenues are expected to expand by between 5 percent and 12 percent to between NT$20.9 billion and NT$22.3 billion, from last quarter’s NT$19.87 billion, in which handset chips contributed more than 70 percent of the total, Hsieh said.
The growth outstripped the forecast of 7 percent quarterly growth and an increase of between zero and 6 percent made by Credit Suisse and Daiwa Capital Markets last week.
“That is because of a recovery from seasonal demand for all products and stable pricing,” Hsieh told investors. “Demand for [chips used in] optical storage and Blu-ray players will outpace others.”
MediaTek said it did not plan to wage a price war to recoup some market share from rivals — Shanghai-based Spreadtrum Communications Co (展訊通信), in particular — at the expense of gross margin and it was satisfied with its 70 percent share of the Chinese handset chip market.
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