Me­di­aTek ex­pects weaker New Tai­wan dol­lar to help Q3 sales

The China Post - - TAIWAN BUSINESS -

Me­di­aTek Inc. ( ), a lead­ing Tai­wanese in­te­grated cir­cuit de­signer, said Wed­nes­day it ex­pects to post bet­ter-than-ex­pected sales in the third quar­ter be­cause of a weak­en­ing New Tai­wan dol­lar.

David Ku, chief fi­nan­cial of­fi­cer of Me­di­aTek, said the re­cent de­pre­ci­a­tion of the New Tai­wan dol­lar against the U.S. dol­lar was steeper than the com­pany pre­vi­ously an­tic­i­pated.

The New Tai­wan dol­lar fell NT$0.320 to close at NT$32.080 against the U.S. dol­lar on Tues­day, the low­est level in five years, af­ter the Peo­ple’s Bank of China cut the Chi­nese yuan’s ref­er­ence rate against the green­back by a record 1.86 per­cent.

The Chi­nese cen­tral bank’s move sent re­gional cur­ren­cies into a tail­spin that con­tin­ued Wed­nes­day morn­ing, when it cut the yuan’s ref­er­ence rate an ad­di­tional 1.62 per­cent against the green­back.

That pushed the New Tai­wan dol­lar to NT$32.199 against the U.S. dol­lar Wed­nes­day at noon, down NT$0.119 from the pre­vi­ous day’s close.

An­a­lysts said the yuan’s de­pre­ci­a­tion has sparked another cur­rency com­pe­ti­tion in the re­gion, and they be­lieved the New Tai­wan dol­lar could fall fur­ther as long as China con­tin­ues to de­press its cur­rency to pro­tect Chi­nese ex­porters and boost its econ­omy.

Me­di­aTek sets prod­uct prices in U.S. dol­lar terms and a de­val­ued lo­cal cur­rency will boost the New Tai­wan dol­lar value of its sales.

At an in­vestor con­fer­ence on July 31, Me­di­aTek said its third quar­ter con­sol­i­dated sales would range be­tween NT$51.7 bil­lion and NT$55.5 bil­lion, up 10-18 per­cent from a quar­ter ear­lier.

That forecast was about 20 per­cent lower than the mar­ket had ex­pected.

Ac­cord­ing to Me­di­aTek, the Q3 sales guid­ance was made based on the as­sump­tion that the New Tai­wan dol­lar would trade at an av­er­age of NT$31.50 to the U.S. dol­lar dur­ing the quar­ter.

Ku said the steep de­cline in the New Tai­wan dol­lar will no doubt give a boost to Me­di­aTek’s sales for the July-Septem­ber pe­riod, but he cau­tioned that the ac­tual fig­ure will de­pend on how the New Tai­wan dol­lar moves down the road.

De­spite the pos­i­tive leads re­sult­ing from the weak­ness of the New Tai­wan dol­lar, shares of Me­di­aTek had fallen 2.29 per­cent to NT$277.50 (US$8.67) as of 12:18 a.m., as the stock was caught in an over­all mar­ket fall trig­gered by a plunge on Wall Street overnight.

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