MediaTek Inc (聯發科), the nation’s No. 1 handset chip designer, will beat its revenue guidance for the third quarter thanks to the expansion of its smartphone chip business, UBS Securities forecast last week.
In a research note dated on Friday, UBS expected MediaTek’s sales to grow 20 percent sequentially in the current quarter, slightly higher than Hsinchu-based company’s projection of between 13 and 18 percent.
The brokerage also predicted MediaTek’s margins would continue to rise in the fourth quarter following the production ramp-up of new MT6575/6577 dual-core platforms for affordable smartphones.
“After showing strong shipment growth in the third quarter, investors now have concerns on potential inventory corrections into the fourth quarter, and it might limit MediaTek’s share price upside in the near term,” said Jonah Cheng (程正樺), a Taipei-based analyst with UBS. “We maintain our view that MediaTek should be able to maintain sequential revenue growth in the fourth quarter of 2012, given the ramp up of new dual-core MT6577 chips.”
However, Cheng said he would also double check the sell-through situation during China’s “Golden Week” holiday from Oct. 1 to Oct. 10 to verify his projection.
UBS maintained a “buy” rating on the stock and a target price of NT$370.
Shares of MediaTek gained 1.35 percent to close at NT$339 on Friday.
On June 27, MediaTek announced that it had developed the MT6577 platform for sub-US$200 smartphones, the fastest growing segment of the global smartphone market.
In the second quarter, cellphone chips accounted for 45 percent to 55 percent of MediaTek’s total sales, with smartphone chips making up 20 to 25 percent of the sales during that time, MediaTek said.
The company shipped 21 million smartphone chips in the April-to-June period, topping an earlier shipment estimate of 18 million to 20 million units.
As a result of solid demand from Chinese buyers, MediaTek has raised its smartphone chip shipment target to 95 million units this year from a previous estimate of 75 million units.
Bill Lu (呂家璈), a Morgan Stanley analyst in Hong Kong, expected MediaTek to ship more than 200 million smartphone chips next year by offering a more complete solution to Chinese handset vendors that includes wireless connectivity and better performing chips.
“China’s smartphone adoption has been faster than the United States and Western Europe, but slower than South Korea thus far, and MediaTek’s smartphone ramp has been faster than its feature phone ramp,” he wrote in a separate note.
Another upside factor for MediaTek is growing interest in “white-box” tablets in emerging markets, which could approach 100 million to 150 million units next year and drive up MediaTek’s revenue if the company can tap into the supply chain, Lu said.
A white-box tablet is a model without a registered brand name, which is usually sold at a lower cost than branded tablets to gain traction among price-sensitive consumers.
Morgan Stanley raised its target price for MediaTek to NT$400 from NT$322, while keeping its “overweight” rating on the stock.
‘SWASTICAR’: Tesla CEO Elon Musk’s close association with Donald Trump has prompted opponents to brand him a ‘Nazi’ and resulted in a dramatic drop in sales Demonstrators descended on Tesla Inc dealerships across the US, and in Europe and Canada on Saturday to protest company chief Elon Musk, who has amassed extraordinary power as a top adviser to US President Donald Trump. Waving signs with messages such as “Musk is stealing our money” and “Reclaim our country,” the protests largely took place peacefully following fiery episodes of vandalism on Tesla vehicles, dealerships and other facilities in recent weeks that US officials have denounced as terrorism. Hundreds rallied on Saturday outside the Tesla dealership in Manhattan. Some blasted Musk, the world’s richest man, while others demanded the shuttering of his
Taiwan’s official purchasing managers’ index (PMI) last month rose 0.2 percentage points to 54.2, in a second consecutive month of expansion, thanks to front-loading demand intended to avoid potential US tariff hikes, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday. While short-term demand appeared robust, uncertainties rose due to US President Donald Trump’s unpredictable trade policy, CIER president Lien Hsien-ming (連賢明) told a news conference in Taipei. Taiwan’s economy this year would be characterized by high-level fluctuations and the volatility would be wilder than most expect, Lien said Demand for electronics, particularly semiconductors, continues to benefit from US technology giants’ effort
ADVERSARIES: The new list includes 11 entities in China and one in Taiwan, which is a local branch of Chinese cloud computing firm Inspur Group The US added dozens of entities to a trade blacklist on Tuesday, the US Department of Commerce said, in part to disrupt Beijing’s artificial intelligence (AI) and advanced computing capabilities. The action affects 80 entities from countries including China, the United Arab Emirates and Iran, with the commerce department citing their “activities contrary to US national security and foreign policy.” Those added to the “entity list” are restricted from obtaining US items and technologies without government authorization. “We will not allow adversaries to exploit American technology to bolster their own militaries and threaten American lives,” US Secretary of Commerce Howard Lutnick said. The entities
Minister of Finance Chuang Tsui-yun (莊翠雲) yesterday told lawmakers that she “would not speculate,” but a “response plan” has been prepared in case Taiwan is targeted by US President Donald Trump’s reciprocal tariffs, which are to be announced on Wednesday next week. The Trump administration, including US Secretary of the Treasury Scott Bessent, has said that much of the proposed reciprocal tariffs would focus on the 15 countries that have the highest trade surpluses with the US. Bessent has referred to those countries as the “dirty 15,” but has not named them. Last year, Taiwan’s US$73.9 billion trade surplus with the US