MediaTek (TPE: 2454) will enjoy a bigger share this year of the high-end smartphone chip market because of a better product mix, a European brokerage said on Feb. 10.
The brokerage cannot be identified due to Financial Supervisory Commission’s regulations, now that the information and forecast it shared may have impacted local bourse.
The brokerage said that MediaTek is planning to finish its designs for three generations of high-end smartphone integrated circuit products in 2015 by using 28-nm, 20-nm and 16-nm process technologies. It may end up with higher operating expenses but it will also end up with higher gross margin, the brokerage said.
“Overall, we expect MediaTek to enjoy its high-end and mid-end smartphone IC share gain. In addition, MediaTek is improving its position among China’s 4G smartphone makers in the mid-end to high-end market,” the brokerage said.
MediaTek remains the leading chip supplier to Chinese smartphone vendors. On Feb. 9, the company reported lower-than-expected earnings of US$0.21 per share for the fourth quarter last year. The company forecast a 10% to 18% sequential decline in its revenue for the first quarter this year, with an estimated profit margin of 12% to 18%, which is below market expectation of 21% because of rising research and development expanses.
On Feb. 9, an anonymous Japanese brokerage kept its “reduce” rating on MediaTek shares and cut its price target from US$14.5 to US$12.9. It said that MediaTek might have been struggling with a “learning curve” for 4G chips as it has been trying to catch up with bigger rival Qualcomm (NASDAQ: QCOM).
“The operating expenses hike in 2015 showed MediaTek’s strong ambition in catching up with Qualcomm, but also implied that narrowing the technology gap is not easy, which reinforced our view that MediaTek remains in a transition period,” the Japanese brokerage said.