As China migrates into the long-term evolution (LTE) telecom network, the intensifying competition in fourth-generation (4G) technology could create headwinds for LTE chipset laggards, especially MediaTek Inc (聯發科), Citigroup Global Markets Inc said yesterday.
Meanwhile, UBS Securities Ltd Taiwan Branch said as MediaTek’s time-division (TD) LTE chips are still not ready, it is unlikely that new smartphones running on the Taiwanese firm’s 4G chips would hit the market in the first half of this year.
The warnings by the two foreign brokerages have added more pressure on the company’s shares, which have dropped 5.64 percent since the beginning of the year. MediaTek shares dropped 3.01 percent to NT$418.50 at the end of trading yesterday.
Citigroup said the Taiwanese chip designer could face rising price competition in China, as China Mobile Ltd (中國移動) — the largest Chinese telecom by subscribers — is gearing up to gain ground in the country’s 4G mobile market.
“China Mobile’s decision to lower the LTE communication standards from five modes to three modes has opened opportunities for China’s local chipset makers. Also, its intention to promote and subsidize LTE phones at 1,000 yuan [US$165] creates greater competition for LTE chipset makers,” Citigroup analyst Roland Shu (徐振志) said in a client note.
Shu said the ramp-up production of mobile phones priced at about 1,000 yuan could cause MediaTek’s 3G octa-core chipsets to lose momentum on the lack of end-device price advantage and China Mobile’s subsidy of LTE phones.
As a result, MediaTek may need to aggressively lower the price of its new octa-core MT6592 chips or sell its existing octa-core LTE chipsets at a lower price than those of rivals Qualcomm Inc and Marvell Technology Group Ltd, he added.
Citigroup has downgraded MediaTek’s shares to “sell” from “neutral” and cut its share price target to NT$402 from NT$435.
UBS Securities also slashed its stock recommendation to “neutral” from “buy,” while retaining its price target at NT$425.
UBS equities and research head William Dong (董成康) said China Mobile’s aggressive plan to promote a TD-LTE platform has inspired more smartphone makers to prioritize LTE-phone development and has created fiercer competition for MediaTek.
In addition, the seasonal slowdown in the current quarter might also limit the upside for the stock in the near term, Dong said in a separate note.
However, Credit Suisse Securities Taipei branch yesterday maintained its “outperform” rating on MediaTek and increased its target price to NT$500 from NT$480, saying the company remains its preferred stock among Chinese smartphone supply-chain firms.
The brokerage said MediaTek would benefit from solid demand for communications devices in China this year and see its market share increase to 50 percent, from 45 percent in 2012.
The company will also gain the upper hand against its rivals because of a better product mix and higher selling prices with the help of high-end octa-core chips, Credit Suisse said.
‘SWASTICAR’: Tesla CEO Elon Musk’s close association with Donald Trump has prompted opponents to brand him a ‘Nazi’ and resulted in a dramatic drop in sales Demonstrators descended on Tesla Inc dealerships across the US, and in Europe and Canada on Saturday to protest company chief Elon Musk, who has amassed extraordinary power as a top adviser to US President Donald Trump. Waving signs with messages such as “Musk is stealing our money” and “Reclaim our country,” the protests largely took place peacefully following fiery episodes of vandalism on Tesla vehicles, dealerships and other facilities in recent weeks that US officials have denounced as terrorism. Hundreds rallied on Saturday outside the Tesla dealership in Manhattan. Some blasted Musk, the world’s richest man, while others demanded the shuttering of his
TIGHT-LIPPED: UMC said it had no merger plans at the moment, after Nikkei Asia reported that the firm and GlobalFoundries were considering restarting merger talks United Microelectronics Corp (UMC, 聯電), the world’s No. 4 contract chipmaker, yesterday launched a new US$5 billion 12-inch chip factory in Singapore as part of its latest effort to diversify its manufacturing footprint amid growing geopolitical risks. The new factory, adjacent to UMC’s existing Singapore fab in the Pasir Res Wafer Fab Park, is scheduled to enter volume production next year, utilizing mature 22-nanometer and 28-nanometer process technologies, UMC said in a statement. The company plans to invest US$5 billion during the first phase of the new fab, which would have an installed capacity of 30,000 12-inch wafers per month, it said. The
MULTIFACETED: A task force has analyzed possible scenarios and created responses to assist domestic industries in dealing with US tariffs, the economics minister said The Executive Yuan is tomorrow to announce countermeasures to US President Donald Trump’s planned reciprocal tariffs, although the details of the plan would not be made public until Monday next week, Minister of Economic Affairs J.W. Kuo (郭智輝) said yesterday. The Cabinet established an economic and trade task force in November last year to deal with US trade and tariff related issues, Kuo told reporters outside the legislature in Taipei. The task force has been analyzing and evaluating all kinds of scenarios to identify suitable responses and determine how best to assist domestic industries in managing the effects of Trump’s tariffs, he
Taiwan’s official purchasing managers’ index (PMI) last month rose 0.2 percentage points to 54.2, in a second consecutive month of expansion, thanks to front-loading demand intended to avoid potential US tariff hikes, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday. While short-term demand appeared robust, uncertainties rose due to US President Donald Trump’s unpredictable trade policy, CIER president Lien Hsien-ming (連賢明) told a news conference in Taipei. Taiwan’s economy this year would be characterized by high-level fluctuations and the volatility would be wilder than most expect, Lien said Demand for electronics, particularly semiconductors, continues to benefit from US technology giants’ effort
RSS