Taipei, Sept. 16 (CNA) MediaTek Inc., Taiwan's largest chip designer, will beat its revenue guidance for the third quarter of 2012 thanks to the expansion of its smartphone chip business, Swiss brokerage UBS Securities forecast recently.
In a research note dated Sept. 14, UBS expected MediaTek's sales to grow 20 percent sequentially in the current quarter, slightly higher than the integrated circuit designer's projection of 13 to 18 percent.
The brokerage also predicted that MediaTek's margins would continue to rise in the fourth quarter following the production ramp-up of new MT6575/6577 dual-core platforms for affordable smartphones.
"After showing strong shipment growth in the third quarter, investors now have concerns on potential inventory corrections into the fourth quarter, and it might limit MediaTek's share price upside in the near term," said Jonah Cheng, a Taipei-based analyst with UBS.
"We maintain our view that MediaTek should be able to maintain sequential revenue growth in the fourth quarter of 2012, given the ramp up of new dual-core MT6577 chips," he wrote in the note.
Cheng said, however, that he will also double check the sell-through situation during China's "golden week" holiday on Oct. 1-10 to verify his projection.
UBS maintained a "buy" rating on the stock and a target price of NT$370 (US$12.6).
Shares of MediaTek gained 1.35 percent to close at NT$339 Friday in Taipei.
MediaTek announced June 27 that it had developed the MT6577 platform for sub‐US$200 smartphones, the fastest growing segment of the global smartphone market.
Featuring dual-core 1 GHz processor architecture, the MT6577 platform can boost application and browser performance by up to 40 percent compared with single‐core platforms, the Hsinchu-based company said.
Bill Lu, a Morgan Stanley analyst in Hong Kong, expected MediaTek to ship over 200 million smartphone chips in 2013 by offering a more complete solution to Chinese handset vendors that includes wireless connectivity and better performing chips.
"China's smartphone adoption has been faster than the United States and Western Europe but slower than South Korea thus far, and MediaTek's smartphone ramp has been faster than its feature phone ramp," he said.
Another upside factor for MediaTek is growing interest in "white-box" tablets in emerging markets, which could approach 100 million to 150 million units in 2013 and drive up MediaTek's revenue if the company can tap into the supply chain, Lu said.
A white-box tablet is a model without a registered brand name, which is usually sold more cheaply than branded tablets to gain traction among price-sensitive consumers.
Morgan Stanley raised its target price for MediaTek to NT$400 from NT$322 while keeping its "overweight" rating on the stock.
In the second quarter of this year, cell phone chips accounted for 45 percent to 55 percent of MediaTek's total sales, with smartphone chips making up 20 to 25 percent of the sales during that time, the company said.
MediaTek shipped 21 million smartphone chips in the April-June period, topping an earlier shipment estimate of 18 million to 20 million units.
Due to solid demand from Chinese buyers, MediaTek has raised its smartphone chip shipment target for 2012 to 95 million units from a previous estimate of 75 million units.
(By Jeffrey Wu)