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IC design houses optimistic about 4Q20 outlook

Most of Taiwan's IC design houses are expected to see strong sales for September, and they are generally optimistic about their business outlook for the fourth quarter of 2020 thanks to clear order visibility, according to industry sources.

A number of Taiwanese IC suppliers, including MediaTek, RichWave and Novatek Microelectronics that had strong business relationships with Huawei, had previously expressed concerns that their September revenues might be weaker than expected, having already fulfilled most of the orders from the Chinese handset vendor, said the sources.

MediaTek's revenues surged 22.6% sequentially and 42% on year to a record high of NT$32.72 billion (US$1.13 billion) in August, driven by a pull-in orders for new 5G mobile SoCs and an array of IC solutions.

Judging that MediaTek's July-August revenues already reached NT$59.4 billion, its third-quarter revenues are on track to reach the high-end target of its guidance range of NT$82.5 billion to NT$87.9 billion, commended the sources.

Although MediaTek has said that its fourth-quarter 2020 revenues are likely to slip within a range of 10% due to a high base in the previous quarter, many market observers are expecting a decline of less than 5%, as MediaTek will continue to ramp up shipments of its 5G SoCs plus ASIC and other chips for consumer electronics applications.

Other IC vendors who have been focusing more on notebook and desktop chips are expected to see their revenues hit record highs in September due to strong sales of end-market devices supporting the stay-at-home economy, said the sources, noting that these firms will include CMedia, Parade Technologies, Elan Microelectronics, ITE Tech, and Global Mixed-mode Technology (GMT).

With current brisk sales in the device end-market likely to last for a longer period, coupled with peak season effects, Taiwan's fabless chipmakers are expected to continue generating impressive sales in the fourth quarter of 2020, said the sources.