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MediaTek hires more R&D staff to boost LTE share

Posted: 10 Feb 2015 ?? ?Print Version ?Bookmark and Share

Keywords:LTE? R&D? smartphone?

Taiwan's largest chip designer, MediaTek, is increasing its R&D staff and employees this year by about a fifth. The move aims at getting a bigger piece of the long-term evolution (LTE) smartphone market from Qualcomm.

"We are hiring people aggressively," said MediaTek CFO David Ku, during a conference call with analysts following the company's announcement of fourth-quarter 2014 results. "We are still quite positive about the LTE market globally."

The company expects to hire about 2,000 people this year, according to Ku. Most of the investment will not contribute to the company's financial results until next year, he added.

Qualcomm, which dominates the LTE business, faces increased competition as its largest rival, MediaTek, pared the U.S. company's market share in the LTE base band business during the third quarter last year, according to Strategy Analytics. Qualcomm's LTE market share dropped to less than 80 per cent in the third quarter for the first time, from 95 per cent a year earlier, the market research firm said.

The worldwide LTE business is just starting to take off. The global market is expected to grow at a compound annual growth rate of 78.6 per cent from 2013 to 2019, reaching a total of $610.7 billion by 2019, according to an October 2014 report by Transparency Market Research.

Soaring shipments

MediaTek forecast that its shipments of LTE products this year will soar to 150 million units from about 30 million last year. The company said it expects to ship more than 450 million chips for smartphones in 2015, an increase of almost a third from the 350 million units that MediaTek forecast for 2014.

MediaTek said it aims to ship 80 million to 85 million smartphone chips during the first quarter of this year.

The company expects to boost its high-end octo-core chips to about 15 per cent to 25 per cent of total smartphone product shipments compared with about 10 per cent to 15 per cent last year. Quad-core will be the company's mainstream product, nearly doubling to about 65 per cent of shipments from 35 per cent last year, Ku said. Dual-core shipments will shrink, he added.

The company forecast that its shipments of chips for tablet computers will reach about 50 million chips this year after the company sold about 40 million units in the fourth quarter last year.

Expanding outside China

MediaTek plans to expand its sales outside China, the company's largest geographic market. The chip designer expects to increase its revenue outside China to about 40 to 50 per cent of total sales in 2015, compared with about 30 to 40 per cent last year, according to Ku.

MediaTek's fourth-quarter 2014 sales rose by 39.3 per cent to NT$55.5 billion ($1.76 billion) from the same period in 2013, mainly due to recognition of revenue from its acquisition of Taiwanese chip designer MStar and increased sales of smartphone chips.

The company's sales increase was nearly double the rise in profit. Net income rose 20.8 per cent to NT$10.4 billion ($330 million) from the same period in 2013. The company's profit margin for the quarter was 18.8 per cent, falling from 21.6 per cent in the same quarter a year earlier.

MediaTek's bottom line may be under pressure during the first half of 2015 because of price competition, CFO Ku said.

- Alan Patterson
??EE Times

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