MediaTek June revenues to reduce sharply on slack sales in China

MediaTek is expected to see its revenues decline sharply in June 2010, probably to below NT$9 billion (US$280.3 million), as the China government's recent efforts to inspect tax evasion by white-box handset makers has seriously affected sales of MediaTek handset solutions in China, according to industry sources.

MediaTek revealed at a technology forum held in New York recently that its revenues will stay flat in the third quarter and gross margin will trend down in the second half, the Chinese-language Commercial Times quoted a JP Morgan Chase report as indicating.

JP Morgan Chase also said that 70-80 handset design houses in Shenzhen, China as well as another 10-20 design companies in Shanghai have been forced to suspend their operations in the past 2-3 weeks as the China government has also waged a campaign to crack down on design houses pre-loading handsets with software designed to trick users into accessing premium rate services without their knowledge.

JP Morgan Chase has lowered its target price for MediaTek to NT$410 (US$12.73) compared to its previous target of NT$490, the paper said. MediaTek's share price dropped NT$6.50 to close at NT$425.5 on the Taiwan Stock Exchange (TSE) on July 2 after a loss of NT$20.50 in the previous session.