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MediaTek's second quarter sales to rise 4%: Daiwa Securities

TAIPEI--Daiwa Securities expects solid demand for smartphone chips to boost the sales of Taiwan-based integrated circuit designer MediaTek Inc. in the second quarter by 4 percent from a quarter earlier.

In a research note released Friday, Daiwa Securities said strong demand from China should help drive MediaTek's smartphone chip shipments for the April-June period 12 percent higher than in the previous quarter to 73 million units.

Because smartphone chips account for a sizable portion of MediaTek's sales, the IC designer is expected to see its overall consolidated sales grow in the current quarter, the brokerage said.

MediaTek's shipments of sophisticated octa-core smartphone chips may have reached 4.5 million units in the first quarter and will continue to grow to 7 million-10 million units in the second quarter, the brokerage predicted.

MediaTek posted NT$46.01 billion (US$1.53 billion) in consolidated sales in the first quarter, beating the company's estimate of NT$41.39 billion-NT$44.57 billion, and some analysts have expressed concerns thatthe high first quarter baseline could compromise growth figures inthe current quarter.

The company's first quarter sales rose 15.59 percent from a quarter earlier and 91.89 percent from a year earlier as MediaTek's Chinese smartphone chip buyers rushed to build inventory to meet demand ahead of the May 1 Labor Day holiday, a peak shopping season.

The strong growth also reflected MediaTek's move to fully bring small rival MStar Semiconductor Inc. under its corporate umbrella on Feb. 1, completing a long merger process.

In March alone, MediaTek posted NT$17.43 billion in consolidated sales, up 10.79 percent from a month earlier. It was the second consecutive month in which the IC designer posted a record high for monthly sales.

Daiwa Securities said MediaTek's smartphone chip shipments for the first half of this year are expected to hit 138 million units, and they could reach the company's goal of 300 million units for the entire year.

The brokerage said it has raised its target price for MediaTek shares to NT$540 from NT$526, while leaving its “buy” recommendation on the stock unchanged.

On Friday, MediaTek shares closed down 0.96 percent to close at NT$456.00 in Taipei after investors were scared off by a fall overnight in the tech-heavy Nasdaq index.

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