16 January 2008
While MediaTek's sales guidance trim raises concerns over white-box handset demand trends from China in the first quarter of 2008, some IC design houses from Taiwan project that the demand will stabilize after the Lunar New Year in early February.
MediaTek, which has strong sales exposure to China-based white-box handset makers, said the slow demand from its customers is a reflection of the China government's macroeconomics control policy. The number one design house in Taiwan projected that demand from these customers should warm up after the Lunar New Year.
Sources at white-box handset makers echoed MediaTek's sentiment, saying that the control does pose a stronger impact over companies that have an unstable sales record. When the cost for securing investment funds grows, and demand does not trend as strong as expected, many of these companies hold off their procurements for components.
When the inventory effectively eases after the Lunar New Year, demand is expected to resume growth amid the effect of the upcoming Beijing 2008 Olympics.
Some industry players highlighted that the growing popularity of handsets supporting dual SIM cards has added to the volatility. Demand for these handsets soared in the third quarter of 2007 as evident in the over 45% sequential sales growth at MediaTek in the quarter. Quarterly handset chips shipments hit 40-50 million units also, the players noted.
However, as demand for these handsets was not sustained, MediaTek thus requires a longer-than-expected time to clear its inventory, they remarked.
