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MediaTek to enjoy share gain in high-end phone chips: brokerage

MediaTek to enjoy share gain in high-end phone chips: brokerage

Taipei, Feb. 10 (CNA) Taiwanese chip designer MediaTek Inc. (???) could gain a bigger share this year of the high-end smartphone chip market due to a better product mix, according to research by a European brokerage. The major Europe-based brokerage said MediaTek plans to complete designs of three generations of high-end, octa-core smartphone integrated circuit products in 2015 by using 28-nanometer, 20-nm and 16-nm process technologies. This should result in higher operating expenses from higher spending on R&D but also a higher gross margin because of a better product mix, said the European brokerage, whose name cannot be reported under new rules set by Taiwan's financial regulator because it was offering specific forecasts that could impact the market. "Overall, we expect MediaTek to enjoy its high-end and mid-end smartphone IC share gain. Besides, MediaTek is improving its position among China's 4G smartphone makers in the mid- to high-end market," the brokerage firm wrote in a research note Monday. It maintained a "buy" rating and a NT$560 (US$88.50) price target for the stock. MediaTek, the leading chip supplier to Chinese smartphone vendors, on Monday reported lower-than-expected earnings of NT$6.65 per share for the fourth quarter, citing higher operating expenses. The Hsinchu-based company also forecast a 10-18 percent sequential decline in its first-quarter revenue, along with an estimated profit margin of 12-18 percent -- well below the market expectation of 21 percent due to rising research and development costs. Another foreign brokerage based in Japan kept its "reduce" rating on MediaTek shares and cut its price target from NT$450 to NT$400. It hinted that MediaTek might be struggling with a "learning curve" for 4G chips as it tries to catch up with bigger rival Qualcomm Inc. "The operating expenses hike in 2015 shows MediaTek's strong ambition in catching up with Qualcomm, but also implies that narrowing the technology gap is not easy, which reinforces our view that MediaTek remains in a transition period," the Japanese brokerage said. MediaTek shares closed down by the daily maximum of 7 percent at NT$454.0 in trading in Taipei on Tuesday. (By Jeffrey Wu)


Updated : 2021-09-25 10:29 GMT+08:00