Taipei, July 24 (CNA) MStar Semiconductor Inc., one of Taiwan's leading integrated circuit makers, will likely become the latest supplier in Asia of mobile phone chips for Nokia Corp., according to a Taipei-based analyst.
"We think MStar will be a reasonable choice for Nokia, as MStar has 1,000 people on its handset chip design team and has been known to offer customized chip solutions for major customers such as Samsung and LG," Nomura Securities analyst Aaron Jeng wrote in a recent note to investors.
Although Nokia has been in talks with MediaTek for a few years, it was to test MediaTek's chip design capability, he said.
MediaTek is the main chip supplier for white-box handset makers, which have significantly eroded Nokia's share in the business over the past few years, he noted.
"China's white-box 2G chip market has been tough in terms of competition, pricing and profits, so that MStar's strategy of differentiation with its higher spec chips cannot work well, particularly as most customers only focus on cost and not performance," Jeng said.
According to Nomura's estimates, Nokia shipments of 2G phones in 2013 should be around 285 million. This will work well in MStar's favor as its shipments of 2G chips for this year are likely to be only about 40 million, Nomura said.
Nokia can help MStar speed up its technology solidification, upgrade brand recognition and more smoothly migrate to 3G, the analyst said.
Meanwhile, Nomura cut its target price for MStar to NT$185 (US$6.4) in light of weak TV demand and pricing risk of TV chips.
Another major risk facing MStar is that its rivals, Novatek Microelectronics Corp. and MediaTek, are now in talks with its biggest clients, Samsung and LG, respectively, the analyst said.
(By Jeffrey Wu)