MediaTek, a major supplier of mobile phone chips, is expected to see its shipments surge this year, thanks to plans of client China Mobile Ltd. to increase its 3G business, a report by the Central News Agency said, yesterday. Specifically, the company is expected to see shipments of chips supporting the TD-SCDMA 3G standard, which is widely deployed in China, double this year, the report said, adding 3G phone chips may account for 10 percent of total phone chip shipments in 2010.

China Mobile has set the ambitious goal of enlisting 50 million 3G users this year. To ensure supply, its high-ranking officials have repeatedly visited major suppliers, including MediaTek.

China Mobile CEO Wang Jianzhou paid a visit to MediaTek in August last year, and it is expected the company's deputy CEO, Sha Yaojia, may visit in the end of March, CNA reported.

Last year, MediaTek shipped out some six million sets of TD-SCDMA chips, with the company taking a 40 to 50 percent market share. At the same time, it is the largest supplier to China Mobile, which has made TD-SCDMA ubiquitous in China.

The company is expected to see shipment of TD-SCDMA chips double this year from 2009, the report said, adding market share is expected to remain at the 40 to 50 percent level.

Sales of 3G chips, however, will contribute little to the company's overall revenue, the report said, adding MediaTek will continue to put its focus on 2.5G chips.

Overall, the company is expected to ship out a total of 450 million sets of mobile phone chips this year, the report said.

MediaTek's revenue for January was NT$13.582 billion, a record high for the firm, due to strong demands from emerging markets.

The company may see February sales fall to NT$7.5 billion to NT$8 billion, due to the Chinese New Year break, and see March sales rebound to above NT$10 billion, according to analysts.

Earlier this week, foreign investors gave different outlooks for MediaTek's stock, currently the highest in Taiwan.

Merrill Lynch reiterated its “buy” recommendation for MediaTek and its target price of NT$680, citing strong demands from various parts of the world.

J.P. Morgan shared Merrill Lynch's enthusiasm and also reiterated its “buy” recommendation and its target price of NT$630.

UBS and HSBC, however, took a neutral position and set their target prices at NT$510 and NT$517, respectively, saying the launch of Smartphone chips was too slow.

Citi, meanwhile, maintained its “sell” recommendation and set its target price at NT$576.

The company yesterday closed at NT$525.

TD-SCDMA, which stands for time division synchronous code division multiple access, is being pursued in the People's Republic of China by the Chinese Academy of Telecommunications Technology, Datang and Siemens AG, in an attempt not to be dependent on Western technology. This is primarily due to practical reasons, as other 3G formats require the payment of patent fees to a large number of Western patent holders.

Proponents of TD-SCDMA also claim that it is better suited for densely populated areas. Further, it is supposed to cover all usage scenarios, whereas W-CDMA is optimized for symmetric traffic and macro cells and TD-CDMA is best used in low mobility scenarios within micro or cells.

 source:chinapost