1、Asia Pacific Equity Research16 July 2012China Technology EdgeHomegrown smartphone industry on track, Rmb500 smartphone emergingChina technologyQin Zhang, CFA AC(852) 2800-J.P. Morgan Securities (Asia Pacific) LimitedAlvin Kwock AC(852) 2800-J.P. Morgan Securities (Asia Pacific) LimitedAshish Gupta(9
2、1-22) 6157-J.P. Morgan India Private LimitedSee page 9 for analyst certification and important disclosures, including non-US analyst disclosures.J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a c
3、onflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. Made-in-China smartphone shipment on track to reach 170MM in 2012, or 25% of global shipment. Smartphone production volume of Chine
4、se vendors in 1H12 reached 70mn, according to HQ Research. Top 3 vendors (Huawei, ZTE and Lenovo) accounted for 42% of total units in 1H12, vs 60+% in 2011. This is driven by 1) MTK/QRD lowering barriers to entry in R 2) Chinese telcos warming up to low-tier brands and 3) Huawei/ZTE focusing on prof
5、itability rather than volume. Vendors gaining market share include China Wireless, Gionee and OPPO. We maintain oursmartphone shipment units by Chinese vendors at 170MM in 2012, but we cut shipment units of Huawei/ZTE by 11%/13% to 40MM/28MM (Table 3). Asian chipset vendors continued to gain market
6、share in June. Total smartphone chipset shipment to Chinese handset makers reached 75-80MMin 1H12. MediaTeks smartphone chipset shipment in June amounted to 8mn (nearly half are EDGE/TD/EVDO), exceeded Qualcomms shipment in China for the first time. Spreadtrums smartphone chipset shipment reached 1m
7、n (including TD and EDGE) for the first time in June and is poised to ramp up quickly to 3mn per month by August. Meanwhile, price competition intensified further ASP of low-to-mid end smartphone chipset is now touching US$6 putting pressure on margins of chipset makers. Chinese telcosand open chann
8、els ready to pushRmb500 smartphonein 2H12. In the open channel, we found 18 smartphone models with 3+ touch screen priced at Rmb500 or below at , a popular website on handsets. Chinese telcos will start to push Rmb500 smartphone in 3Q12. For example, multiple smartphone models including Lenovo A288t
9、, Huawei 8808D and K-touch 800A will be launchedfor China Mobile in July-August period. China Unicom continues to focus on the Rmb800-1,500 segment but will launch Rmb500 models as well. We summarized China Unicoms planned smartphone specifications (screen, CPU, RAM, ROM, camera, sensor and others)
10、in 5 price categories in Table 4. Whitebox tablet a passing fad or here to stay? Whitebox tablet shipment in 2012 could exceed 40MM, according to EE Times and several industry sources. In 2Q12 whitebox tablet shipment was 9-10MM vs 11-12MM in 1Q12. The 20% drop qoq is mainly due to high inventory le
11、vel at the end of 1Q12. Major chipset makers for whitebox tablets include Rockchip, Allwinner, VIA, Infotmics and Amlogic. These are mostly 7ones with FOB price of US$50. They are mainly replacing multiple devices such as MP4s, PDAsand DVDs in emerging markets. Vendors are aiming to launch 5, 6, 8 a
12、nd 9 products entering 2013. Well follow the space closely to see whether whitebox tablet will start to impact PC and smartphone market then. Stock implication: We maintain our positive view on MediaTek and Spreadtrumas they will continue to ride the wave of low-price smartphones. July 2012IssueRese
13、arch highlightsLenovo Group Limited: Good entry point emerging; share gain thesis stays intact25 JunAsian Technology Hardware: 2H12 Stock Strategy: Tough summer, before big ramp from Sep onward25 JunBig M + Small M = Giant M?: MediaTek announces tender offer for MStar - ALERT22 JunSpreadtrum Communi
14、cations: TD smartphone chipset momentum picking up22 JunTechnology Hardware: A tough summer Expect broad-based guidance cut in July/ Aug20 JunChina Technology Edge: Handset weak, telecom equipment on track, new electronics subsidy unexciting14 JunDigital China: Strong commercial demand and improving
15、 product mix likely to lift OPM outlook13 JunMediaTek Inc.: Time to buy: multiple conditions in place, we see it as a core holding for the mass market smartphone trend12 JunGlobal Communications Equipment price points need to be more attractive -ALERT6 JunPC Forecasts: Tough summer ahead as demand s
16、lowdown spreads; stick with those with strong market share gains quad-core multi-mode LTE chipset will be launched in 2Q12. Maintain OW: We raise our revenue forecasts on higher smartphone chipset shipment volume but we lower our margin assumption due to intensified price competition among chipset m
17、akers. We largely maintain our EPS estimates. We reiterate OW and our Dec-12 TP of US$22, based on 9x 1Y forward P/E.6Asia Pacific Equity Research13 July 2012Qin Zhang, CFA(852) 2800- Company description Pand (2) no part of any of the research analysts compensation was, is, or will be directly or in
18、directly related to the specific recommendations or views expressed by the research analyst(s) in this report.Important Disclosures Client:J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as clients: MediaTek Inc., Spreadtrum Communications. Client/Non-Investme
19、nt Banking, Securities-Related: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as clients, and the services provided were non-investment-banking, securities-related: MediaTek Inc Client/Non-Securities-Related: J.P. Morgan currently has, or had within the past
20、 12 months, the following company(ies) as clients, and the services provided were non-securities-related: MediaTek Inc Non-Investment Banking Compensation:J.P. Morgan has received compensation in the past 12 months for products or services other than investment banking from MediaTek IncCompany-Speci
21、fic Disclosures: Important disclosures, including price charts, are available for compendium reports and all J.P. Morgancovered companies by visitinghttps:/ calling 1-800-477-0406, or emailing with your request.Date Rating Share Price (NT$)Price Target (NT$)30-Apr-07 OW 393.37 453.0009-May-07 OW 44
22、5.13 507.0020-Jun-07 N 482.77 507.0031-Jul-07 OW 585.96 625.0010-Sep-07 OW 592.87 786.0021-Oct-07 OW 599.79 800.0001-Nov-07 OW 625.48 766.0029-Jan-08 OW 332.01 524.0017-Apr-08 N 390.31 331.0031-Jul-08 N 319.36 290.0008-Sep-08 OW 361.28 425.0009-Oct-08 OW 281.44 315.0031-Oct-08 OW 294.41 335.0019-Nov
23、-08 OW 202.59 315.0004-Dec-08 OW 194.61 230.0012-Jan-09 OW 250.50 310.0008-Feb-09 OW 272.46 345.0021-Apr-09 N 317.37 345.0002-Aug-09 OW 471.50 560.0004-Aug-09 OW 453.00 610.0008-Sep-09 OW 518.00 660.0007-Oct-09 OW 513.00 680.0027-Oct-09 OW 467.00 615.0030-Oct-09 OW 471.50 630.0022-Mar-10 OW 530.00 6
24、50.0014-Jun-10 N 517.00 490.0030-Jun-10 N 452.50 410.0028-Jul-10 N 442.00 380.0003-Oct-10 N 449.00 330.0001573144716287859421,099Price(NT$)Oct06Jul07Apr08Jan09Oct09Jul10Apr11Jan12MediaTek Inc. (2454.TW, 2454 TT) Price ChartN NT$507OW NT$800N NT$331OW NT$315OW NT$230N NT$345OW NT$660OW NT$630N NT$410
25、N NT$315 OW NT$390OW NT$507OW NT$786OW NT$524OW NT$425OW NT$315OW NT$345OW NT$610OW NT$615N NT$490N NT$330 OW NT$370OW NT$420OW NT$330OW NT$453OW NT$625OW NT$766 N NT$290OW NT$335OW NT$310OW NT$560OW NT$680OW NT$650N NT$380OW NT$540OW NT$480OW NT$450OW NT$370Source: Bloomberg and J.P. Morgan; price
26、data adjusted for stock splits and dividends.Initiated coverage Apr 30, 2007.10Asia Pacific Equity Research16 July 2012Qin Zhang, CFA(852) 2800- 23-Nov-10 N 399.00 315.0010-Jan-11 OW 390.00 540.0002-May-11 OW 337.50 480.0028-Jun-11 OW 309.00 370.0019-Oct-11 OW 328.00 450.0030-Oct-11 OW 318.00 420.00
27、10-Jan-12 OW 267.00 390.0003-Feb-12 OW 286.50 370.0029-Apr-12 OW 253.00 330.00Date Rating Share Price ($)Price Target ($)18-Nov-11 OW 27.78 36.0010-Jan-12 OW 14.98 30.0001-Mar-12 N 13.88 15.0028-May-12 OW 16.49 22.00The chart(s) show J.P. Morgans continuing coverage of the stocks; the current analys
28、ts may or may not have covered it over the entire period. J.P. Morgan ratings: OW = Overweight, N= Neutral, UW = UnderweightExplanation of Equity Research Ratings and Analyst(s) Coverage Universe: J.P. Morgan uses the following rating system: Overweight Over the next six to twelve months, we expect
29、this stock will outperform the average total return of the stocks in the analysts (or the analysts teams) coverage universe. Neutral Over the next six to twelve months, we expect this stock will perform in line with the average total return of the stocks in the analysts (or the analysts teams) cover
30、age universe. Underweight Over the next six to twelve months, we expect this stock will underperform the average total return of the stocks in the analysts (or the analysts teams) coverage universe. In our Asia (ex-Australia) and UK small-and mid-cap equity research, each stocks expected total retur
31、n is compared to the expected total return of a benchmark country market index, not to those analysts coverage universe. If it does not appear in the Important Disclosures section of this report, the certifying analysts coverage universe can be found on J.P. Morgans research website, . Coverage Univ
32、erse: Zhang, Qin: AsiaInfo-Linkage Inc. (ASIA), Digital China (0861.HK), Spreadtrum Communications (SPRD), ZTE Corp (0763.HK)Kwock, Alvin YL: ASM Pacific (0522.HK), BYD (1211.HK), Erajaya Swasembada TbkPT (ERAA.JK), Foxconn Intl Holdings (2038.HK), HTC Corp (2498.TW), MediaTek Inc. (2454.TW), Synnex
33、 (2347.TW), TPV Technology (0903.HK), Wistron Corporation (3231.TW)012243648Price($)Jun08Mar09Dec09Sep10Jun11Mar12Spreadtrum Communications (SPRD, SPRD US) Price ChartN $15OW $30OW $36 OW $22Source: Bloomberg and J.P. Morgan; price data adjusted for stock splits and dividends.Initiated coverage Nov
34、18, 2011.11Asia Pacific Equity Research16 July 2012Qin Zhang, CFA(852) 2800- J.P. Morgan Equity Research Ratings Distribution, as of July 6, 2012Overweight(buy)Neutral(hold)Underweight(sell)J.P. Morgan Global Equity Research Coverage 45% 43% 11%IB clients* 51% 47% 34%JPMS Equity Research Coverage 44
35、% 48% 8%IB clients* 70% 62% 51%*Percentage of investment banking clients in each rating category.For purposes only of FINRA/NYSE ratings distribution rules, our Overweight rating falls into a buy rating category; our Neutral rating falls into a hold rating category; and our Underweight rating falls
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