MediaTek Inc (聯發科), the nation’s top handset chipmaker, yesterday posted 17.7 percent sequential growth in net income in the first quarter boosted by higher-than-expected shipments of better-margin advanced smartphone chips.
During the quarter ending March 31, net income expanded to NT$10.81 billion (US$357 million), compared with NT$8.4 billion in the final quarter of last year, hitting a historic high.
The figure exceeded the NT$9.95 billion forecast by Credit Suisse analyst Randy Abrams and NT$9.48 billion forecast by Daiwa Capital Markets analyst Eric Chen (陳慧明).
“Demand for smartphones was quite strong in the first quarter. Smartphone are thriving in emerging markets,” MediaTek president Hsieh Ching-jiang (謝清江) told a conference call.
Chinese brands have expanded their presence in emerging markets such as India, Southeast Asia, Latin America, Africa, Russia and the Middle East, which has helped boost demand for dual-core and quad-core chips, Hsieh said.
Last quarter, shipments of smartphone chips increased to between 75 million and 80 million units, greatly surpassing the company’s forecast three months ago of 65 million units.
Advanced octa-core smartphone chips accounted for more than 10 percent of the total shipments last quarter, higher than the 5 percent to 10 percent share forecast by MediaTek, paving the way for the company to hit its target of a 10 percent to 15 percent share for the whole year.
MediaTek counts Xiaomi Corp (小米), Lenovo Group (聯想) and TCL Communication Technology Holdings Ltd among its clients.
The company expects the growth momentum to extend into the current quarter.
“Demand in emerging markets for smartphones remains robust in the second quarter... Demand from overseas markets [emerging markets, the US and Europe] will outpace demand in China,” Hsieh said.
Hsieh said demand for octa-core smartphone chips is growing rapidly this quarter after tier-one customers started using the chips in their phones last quarter.
Shipments of smartphone chips will grow 12.5 percent to 90 million units from the first quarter, Hsieh forecast.
Revenue is set to grow by between 12 percent and 20 percent sequentially to between NT$51.5 billion and NT$55.2 billion, compared with NT$46 billion in the first quarter, Hsieh said.
The growth rate is much faster than Abrams’ expectation of a 3.3 percent quarterly increase. Abrams maintained his “outperform” rating on MediaTek shares with a target price of NT$540, implying a 14.4 percent upside from the closing price of NT$472 yesterday.
“MediaTek offered a strong surprise at the gross-margin level, in addition to strong revenue guidance, which may trigger upward earnings revisions from analysts,” Chen said in a report yesterday.
MediaTek said its gross margin will climb to about 48.5 percent this quarter, from 48.3 percent in the first quarter.
“MediaTek may surprise investors again when it releases its second-quarter results. We are positive for its revenue and gross margin trend,” Chen said.
Daiwa maintained its “buy” rating on MediaTek shares.
To sustain growth, MediaTek plans to ship its first octa-core long-term evolution (LTE) chip in the third quarter ahead of its original schedule of the fourth quarter and it plans to ship its first 64-bit chip and wearable chips in the second half of the year.
Separately, United Microelectronics Corp (UMC, 聯電), the world’s No. 3 contract chipmaker, yesterday posted stronger-than-expected net profit of NT$1.18 billion for the first quarter.
That represented about 58 percent growth from NT$749 million in the prior quarter.
“For the second quarter of 2014, UMC will benefit from continued growth in customer demand, especially from the communications segment,” UMC chief executive Yen Po-wen (顏博文) said.
Shipments are set to grow by a low-teens percentage this quarter from last quarter’s 1.26 million units, while average selling price would stay unchanged, Yen said.
Factory utilization will be about 80 percent from last quarter’s 81 percent, while gross margin will improve to about 25 percent from 18.6 percent last quarter, Yen said.
CHIP HANG-UP: Surging memorychip prices would deal a blow to smartphone sales this year, potentially hindering one of MediaTek’s biggest sources of revenue MediaTek Inc (聯發科), the world’s biggest smartphone chip designer, yesterday said its new artificial intelligence (AI) chips used in data centers are to account for 20 percent of its total revenue next year, as cloud service providers race to deploy AI infrastructure to meet voracious demand. MediaTek is believed to be developing tensor processing units for Google, which are used in AI applications. While it did not confirm such reports, MediaTek said its new application-specific IC (ASIC) business would be a new growth engine for the company. It again hiked its forecast for the addressable ASIC market to US$70 billion by 2028, compared
Motorists ride past a mural along a street in Varanasi, India, yesterday.
MediaTek Inc (聯發科), the world’s biggest smartphone chip supplier, yesterday said it plans to double investment in data center-related technologies, including advanced packaging and high-speed interconnect technologies, to broaden the new business’ customer and service portfolios. The chip designer is redirecting its resources to data centers, mainly designing application-specific integrated circuits (ASIC) with artificial intelligence (AI) capabilities for cloud service providers. The data center business is forecast to lead growth in the next three years and become the company’s second-biggest revenue source, replacing chips used in smart devices, MediaTek president Joe Chen (陳冠州) told a media event in Taipei. “Three or four years
AT HIGH CAPACITY: Three-month order visibility on stable customer demand would push factory utilization to between 80 and 85 percent, Vanguard’s president said Foundry service provider Vanguard International Semiconductor Corp (世界先進) yesterday said it is unable to fully satisfy surging demand for chips used in artificial intelligence (AI) servers and data centers, amid an AI infrastructure investment boom that is crowding out production of less advanced chips. Vanguard is facing an “undersupply of chips” made using mature process technologies, due to strong demand for AI products and improving demand from customers in the commercial, industrial and auto sectors, which are digesting excess inventory to a healthier level, company chairman Fang Leuh (方略) told a virtual investors’ conference. However, Vanguard gave a more conservative view on
RSS