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Daiwa Securities expects MediaTek's May sales to fall over 20%

Daiwa Securities expects MediaTek's May sales to fall over 20%

Taipei, May 24 (CNA) Daiwa Securities said Friday that the consolidated sales of MediaTek Inc., one of Taiwan's leading integrated circuit designers, are likely to fall 20 percent in May from the previous month because of inventory adjustments in China. In a research note, the Japanese brokerage said the IC designer's smartphone chip shipments in May are expected to fall to 14 million units from the 19 million units shipped in April. MediaTek's consolidated sales in April totaled NT$12.57 billion (US$419 million), 33.32 percent higher than in March, largely on the back of massive orders from Chinese smartphone suppliers looking to build their inventories ahead of the May 1 Labor Day holiday in China, when consumer demand peaks. The April sales were also the highest since January 2010, when MediaTek's consolidated revenue was NT$13.58 billion. Daiwa Securities said that after Chinese vendors stocked up on chips in April, they are now paring their inventories, which could impact MediaTek's May shipments and sales.
MediaTek shares have suffered downward pressure in recent sessions amid fears that its May sales will fall below NT$10 billion due to Chinese buyers' efforts to cut inventories. On Friday, the stock fell 1.89 percent to close at NT$363.00 with 9.88 million shares changing hands, while the weighted index on the Taiwan Stock Exchange ended 0.34 percent lower at 8,209.78. "MediaTek shares underperformed the broader market today as investors seized on the inventory adjustment issue to dump the stock throughout the session," Horizon Securities analyst Benson Huang said. "The report of Daiwa Securities simply raised concerns over inventory issues in China," Huang said. Daiwa Securities expected that MediaTek's sales will pick up in June, however, after inventories fall to a reasonable level. Stronger sales in June could help the IC designer still meet its second-quarter sales goal of between NT$30 billion and NT$31.6 billion, up 25-32 percent from a quarter earlier, the brokerage said. Huang agreed, saying MediaTek has gained the upper hand in the China market as many Chinese smartphone vendors, including unbranded model suppliers, favor the Taiwanese firm's customized services. "But MediaTek shares will be in a consolidation mode for a while due to the May sales concerns until it moves closer to the nearest technical support level at NT$350-NT$353," Huang said. (By Jackson Chang and Frances Huang)


Updated : 2021-05-18 04:47 GMT+08:00