LONDON – Sales at Spreadtrum Communications Inc., a leading Chinese fabless chip company, came in ahead of its own guidance as the company continued to notch up strong revenue growth and increased profits by serving mobile phone handset makers.
Spreadtrum (Shanghai, China) announced second quarter sales of $160.2 million, against guidance of $152 million to $158 million. The figure was up 16.9 percent compared with the previous quarter and more than doubling sales for the same quarter a year before – up 124.2 percent. The company made a net income of $32.5 million in 2Q11, compared to $27.5 million in 1Q11 and $11.1 million in 2Q10.
The company expects revenue in third quarter to increase again and be between $172 million and $178 million; a mid-point increase of about 9 percent.
The company's rising sales and profits are attributed to success in 2G, 2.5G and 3G mobile phones where its ability to increase unit sales is more than counteracting declining average selling prices.
Sales volume of 2G/2.5G baseband and radio frequency bundled semiconductors realized in 2Q11 increased 21.0 percent sequentially and 245.6 percent year-over-year, the company said. Sales volume of 3G bundle semiconductors realized in 2Q11 increased 20.2 percent sequentially and 65.1 percent year-over-year.
The average selling price per unit of 2G/2.5G bundle semiconductors in 2Q11 decreased 7.2 percent sequentially and 20.6 percent year-over-year. The average selling price per unit of 3G bundle semiconductors in 2Q11 increased 7.5 percent sequentially and decreased 30.8 percent year-over-year.
"We exceeded revenue guidance in 2Q 2011 as quarterly revenue grew in both our 2.5G and 3G product lines, driven by expansion of our footprint in both emerging markets and the China domestic TD-SCDMA market," said Leo Li, chairman and CEO of Spreadtrum, in a statement. "In TD-SCDMA, our advanced 40-nm platform is delivering advantages in performance and cost that enable us to outperform the competition with standby and talk time better than the 2.5G experience, at a consumer handset cost that is close to EDGE products."
Spreadtrum said it now has a 50 percent market share in the TD-SCDMA market thanks to design wins with global and domestic OEMs. It is also in the process of acquiring MobilePeak as a point of entry into the HSPA+ market.