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MediaTek could take half of China's mobile chip market

TAIPEI -- MediaTek Inc., one of Taiwan's leading integrated circuit designers, is expected to hold a 50-percent share of China's smartphone chip market by 2014 on the back of the launch of an eight-core chip with the serial number MT6592, Daiwa Securities said Thursday.

In a research note, Daiwa Securities said MediaTek's octa-core chip will enable Chinese smartphone vendors to boost their competitiveness by narrowing the technology gap between them and their foreign counterparts.

With assistance from MediaTek's innovation, Chinese smartphone vendors are likely to launch more high-range models to compete on the global market, the brokerage said.

In addition to the eight-core smartphone chip, MediaTek is also expected to use its two quad-core chips — the MT6582 and the MT6588 — to further penetrate the Chinese market, Daiwa Securities said.

The 50-percent market share expected for 2014 will represent an improvement from an estimated 48-percent share for 2013 made by Daiwa Securities.

The brokerage was upbeat about MediaTek's shipments for the third quarter, saying that the IC designer is likely to ship about 64 million smartphone chips during the July-September period, up 25 percent from a quarter earlier, on solid demand from China.

It said MediaTek could post a 16-percent sequential increase in consolidated sales for the third quarter, beating the IC designer's estimate of 5 percent-13 percent growth.

As a result, Daiwa Securities said MediaTek could report NT$6.18 in earnings per share for the third quarter, up 24 percent from the second quarter.

Shares of MediaTek rose 1.08 percent to close at NT$374.00 on the Taiwan Stock Exchange yesterday, partly in reflection of strong sales prospects for the third quarter.

In addition, as the pricing of Apple Inc.'s lower cost iPhone 5C is seen as being too high, Chinese consumers will buy more affordable Chinese-branded smartphones — most of which use MediaTek chips — rather than Apple devices.

The market had previously expected that the launch of the iPhone 5C would prompt many Chinese consumers to shift their buying from Chinese brands to Apple, which could impact MediaTek's chip shipments.

UBS Securities said anxiety over the impact on MediaTek of Apple's low-end model has been quelled to some extent, adding that MediaTek's smartphone chip shipments for 2013 will total 217 million units, higher than the IC designer's estimate of 200 million units.

The brokerage also expects MediaTek's smartphone chip shipments for 2014 to rise to 331 million units.

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