Report: MediaTek first to slow foundry orders?

June 25, 2007 – MediaTek Inc. reportedly will be the first Taiwan fabless house to slow down its business with foundry suppliers in 3Q, though the company says the move is being incorrectly interpreted as “putting on the brakes,” notes the Taiwan Economic News.

The paper cites “insiders” saying the company informed its foundries that it would slightly reduce its outsourcing volume, as it watches backlog build in anticipation of demand for mobile-TV and handset chips. The move would likely significantly impact UMC (where it is a top-3 customer), as well as TSMC where it has also become a major customer, notes the paper.

MediaTek’s inventory value swelled to ~$1.65 million in 1Q vs. $1.05 million, and is expected to climb in 2Q as well. Without slowing down outsourcing volume, the company fears a serious inventory backlog in 2H07, the paper notes.

The paper also notes that some industry watchers point out that MediaTek’s decision is based solely on internal inventory — not competitive moves, or a lack of handset demand in China.


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