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MediaTek's Q2 revenue may rise 15-20%: firm

TAIPEI, Taiwan -- Revenue for MediaTek Inc., the nation's biggest handset designer, is expected to grow 15 to 20 percent in the second quarter thanks to strong demand for smartphones in China, according to Merrill Lynch

According to Merrill Lynch's latest forecast, MediaTek is likely to ship 52 million smartphone chip units in the second quarter and a total of 200 million units in 2013. The growth margin is expected to rise 1 percent, reaching 43 percent.

The financial management and advisory company maintained its “buy” rating for MediaTek and set the target price at NT$370 yesterday.

Merrill Lynch said companies in the smartphone supply chain have benefited from surging demand for the mobile devices in China. Both China's Spreadtrum Communications and MediaTek's shipments are expected to double on a year-on-year basis.

In March alone, users of 3G telecommunications services in China rose by 14.2 million, or a 178-percent year-on-year increase. In light of this, it is still too early for the market to worry about overstocking in the industry, as the chip inventory will decrease fairly quickly, said Merrill Lynch.

MediaTek posted a NT$3.92 billion pretax profit for the first quarter, which reached the higher end of the company's target range and increased 50.8 percent year-on-year on the back of solid smartphone chip demand from China. The IC designer's first-quarter earnings per share before tax stood at NT$2.9.

MediaTek's stock price was up 0.14 percent, closing at NT$366.5 yesterday, following recent news of alleged insider trading regarding the MStar-MediaTek merger.

Both MediaTek and MStar have said the insider trading investigation has not affected the deal, which will take effect on Aug. 1 as previously scheduled.

New Chip Released

In order to expand its presence in the budget smartphone market, MediaTek introduced MT 6572, the company's latest dual-core system-on-a-chip, yesterday.

According to the company, it's the world's first dual-core system-on-a-chip, integrating Wi-Fi, GPS, Bluetooth and FM radio for power efficiency and cost effectiveness.

The cost and performance of the new chip will speed up product development for low-end mobile phones, said Jefferey Ju, general manager of MediaTek's Wireless Communication Business Unit.

According to the company's estimates, the chip will be used in hundreds of handset models by June, which will lower the price of budget mobile phones and thus encourage customers to change their mobile devices.

Mass production of MT 6572 will kick off later this month, said the firm.

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