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1、V1203 October 2012Asia PacificEquity ResearchTechnology Hardware & EquipmentChina Smartphone SectorResearch AnalystsRandy Abrams, CFA886 2 2715 6366randy.abramscredit-Yan Taw Boon852 2101 7039yantaw.booncredit-CHANNEL CHECKInnovation expanding the low-tier opportunityFigure 1: Low-cost smartphone bu
2、ild costs span from low to high-endV4000 V8 V9 V11BOM Price:TechnologyDisplayOperating SystemCameraPixelsProcessorBatteryChipset$58EDGE3.5Android 2.32MP480x320650MHz1400mAhMT6573$105WCDMA4.0Android 2.35MP800x480650MHz1500mAhMT6573$125WCDMA4.3Android 4.05MP960x5401 Ghz1600mAhMT6575$150WCDMA4.5Android
3、 4.08MP1280x7201 Ghz1600mAhMT6575$185WCDMA4.5Android 4.08MP1280x7201.2GHz Dual Core1600mAhMT6577Source: Company data Chinas smartphone innovation fuelling the market. We remain positiveon the smartphone growth opportunity in emerging markets following ourvisit to the P/T Expo Comm in Beijing and rec
4、ent updates from the carriersand supply chain. A broader range of price points from EDGE up to multi-core HSPA+/TD can allow Chinese brands to gain share and grow. TD-SCDMA push more aggressiveMarvell/Spreadtrum to benefit.China Mobile at its TD-SCDMA summit projected 60 mn units in 2012 andmore tha
5、n 100 mn in 2013 with over 50 mn into the open channel. Marvell islaunching a quad core TD/WCDMA solution next year while Spreadtrumleads in the low-end and will launch dual core for volumes in 1Q13. WCDMA: Spanning a wider price rangeQualcomm/Mediatekaggressive. The low-cost WCDMA channel is witnes
6、sing a rapid move tomulti-core processors, allowing Chinese brands to garner share from themid-tier with more functionality. Mediatek and Qualcomm quad coreplatforms are targeting 1Q13, though joined by Marvells quad A7TD+WCDMA (PXA1088) later in 1H13. Low-cost tablets are anotheropportunity at 50 m
7、n units in 2012 although the IC space is crowded withprivate Chinese companies. Mediatek will launch a standalone AP in 2013. Stock calls. We expect share gains from local Chinese vendors, broaderproduct lines at wider price ranges and push in export channels to continuehealthy unit growth in 2013.
8、Main risks are: (1) normal inventory correctionsand (2) chipset price cuts which will limit some bullish calls for meaningfulGM expansion. We are RESTRICTED on Mediatek but see an attractiveopportunity at reasonable valuations for Spreadtrum and RDA in chipsetsand AAC in micro-acoustic components.DI
9、SCLOSURE APPENDIX CONTAINS ANALYST CERTIFICATIONS AND THE STATUS OF NON-US ANALYSTS. U.S.Disclosure: Credit Suisse 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 conflict of interest that could affect the o
10、bjectivity of this report. Investorsshould consider this report as only a single factor in making their investment decision.CREDIT SUISSE SECURITIES RESEARCH & ANALYTICSBEYOND INFORMATIONClient-Driven Solutions, Insights, and Access203 October 2012Focus charts and tablesFigure 2: Tier 2 brands now g
11、aining share in ChinaFigure 3: Emerging mkts surpassed developed mkts in 1Q12Mn (units)30,00025,00020,00015,00010,0005,0000Local brand share (%)40.0%35.0%30.0%25.0%20.0%15.0%10.0%5.0%0.0%Mn (units)100,00090,00080,00070,00060,00050,00040,00030,00020,00010,0000Emerging mkt share (%)60.0%50.0%40.0%30.0
12、%20.0%10.0%0.0%1Q112Q113Q114Q111Q122Q121Q112Q113Q114Q111Q122Q12Tier 2 brandsHuawei/ZTETier onesLocal brand shareDeveloped market unitsEmerging market unitsEmerging market shareSource: Company data, Credit Suisse estimatesSource: Company data, Credit Suisse estimatesFigure 4: Upcoming single-chip dua
13、l-core apps processor + TD-SCDMA basebandChipset vendorChipset modelAvailabilityBasebandCPU coreClock speedGraphicsGPU performanceCamera supportVideo performanceProcessMarvellPXA9883Q12TD-HSPA/EDGE/GSMDual-core ARM Cortex A91.2 GHzVivante GC10001,560M Pix/s, 96M Tri/s16-Mpixels1080p Full HD40nmLeadc
14、oreLC18103Q12TD-HSPA/EDGE/GSMDual-core ARM Cortex-A91.2 GHzARM Mali 400550M Pix/s,35M Tri/s20-Mpixels1080p Full HDTSMC 40LPSpreadtrumSC88204Q12ETD-HSPA/EDGE/GSMDual-core ARM Cortex-A51.2 GHzARM Mali 400256M pix/s, 30M Tri/s8-Mpixels720pTSMC 40LPMediatekMT65831Q13EHSPA+ / TD-SCDMADual-core ARM Cortex
15、-A71.X GHzPowerVR SGX5441,600M Pix/s, 55M Tri/s8-Mpixels720pTSMC 28nmSource: Company dataFigure 5: LTE-FDD/TDD chipsets from major chipset vendorsChipset vendorModelBasebandLTEDL/UL speedMIMOProcess nodeMarvellPXA1802TD-LTE/LTE FDDLTE Category 4150/50 MbpsN/A40LPLeadcoreLC1761LTD-LTE/LTE FDDLTE Cate
16、gory 4150/50 Mbps4x2 MIMO40LPSpreadtrumSC9610TD-LTELTE category 3100/50 Mbps2x2 MIMO40LPMediatekMT7138TD-LTE / FDD-LTELTE category 4100/50 MbpsN/A65LPHisiliconBalong 710TD-LTE/LTE FDDLTE Category 4150/112 Mbps2x2 / 4x2 MIMO40LPSource: Company dataFigure 6: Android tablet units catching up with iPad1
17、20100806040Figure 7: Some 80% of tablets made in China are exported605040302010200020112012E2010201120122013201420152016China - tablet shipment (mn units)Source: IDCiOSAndroidOthersSource: EETimesChina - domestic tablet shipment (mn units)China Smartphone Sector303 October 2012Innovation expanding t
18、he low-tieropportunityWe provide an update on the low-cost smartphone market following our visit to the P/T CommExpo in Beijing and recent developments from the carrier and supply chain. Keydevelopments include: (1) China Mobiles more aggressive push on TD-SCDMA, (2)innovation on multi-core platform
19、s to have an effect on performance rather than cost, and (3)fast expansion in the low-cost tablet space, though dominated by unlisted Chinese vendors.We remain positive on the emerging markets smartphones growth opportunity and believe2013 can remain a solid growth year with enough market expansion
20、and productinnovation from the chipset players to maintain growth with at least stable margins. Abroader range of price points from low-end EDGE up to multi-core HSPA+ can allow thebranded Chinese vendors to gain share and squeeze the mid-tier vendors further. We notethat emerging markets have overt
21、aken developed markets this year in volume terms andlow-cost vendors in China have seen a rapid inflection in the past few quarters to takemarket share. Once growth slows and the market becomes saturated, the space will needto consolidate or find continued ways to innovate (rather than race to the b
22、ottom on costs)to avoid excess profits crowded out by new entrants as happened in feature phones. In themeantime, we still see significant expansion both in China and the export channel, whichis still at a nascent stage.Chinese brands have anenlarging ecosystem todrive share gainsFigure 8: Tier 2 br
23、ands now gaining share in ChinaFigure 9: Emerging mkts surpassed developed mkts in 1Q12Mn (units)30,00025,00020,00015,00010,0005,0000Local brand share (%)40.0%35.0%30.0%25.0%20.0%15.0%10.0%5.0%0.0%Mn (units)100,00090,00080,00070,00060,00050,00040,00030,00020,00010,0000Emerging mkt share (%)60.0%50.0
24、%40.0%30.0%20.0%10.0%0.0%1Q112Q113Q114Q111Q122Q121Q112Q113Q114Q111Q122Q12Tier 2 brandsHuawei/ZTETier onesLocal brand shareDeveloped market unitsEmerging market unitsEmerging market shareSource: Company data, Credit Suisse estimatesSource: Company data, Credit Suisse estimatesAggressive TD pushMarvel
25、l / Spreadtrum to benefitChina Mobiles TD-SCDMA push growing more aggressiveChina Mobile (CM) held a TD-SCDMA summit last week for its supply chain and projectedan optimistic stance for market growth. The company maintained its expectations to sell60 mn TD-SCDMA mobile terminal devices in 2012, up f
26、rom 9.4 mn in 2010. Spreadtrumbelieves that volume will also be supplemented by 2030 mn retail channel units. Morenotably, CM now expects to sell over 100 mn TD-SCDMA mobile terminals in 2013, 80%of which will be smartphones. Further, CM is looking to split the 100 mn units, with 50 mninto the carri
27、er channel and 50 mn in the retail open channel to allow faster time to marketand customisationtraits that could enable Spreadtrums low-cost supply chain.China Mobile also plans to expand its distribution channels to allow customers to buy TD-SCDMA devices from both CM outlets and its partners sales
28、 network. The company hassigned strategic deals with several nationwide consumer electronics stores, includingSuning and Gome.China Smartphone SectorChina Mobile projects itsTD-SCDMA shipments willexpand from 60 mn units in2012 to 100 mn+ in 20132014403 October 2012More multi-core TD-SCDMA chipsets
29、coming into the marketMulti-core TD-SCDMA chipset designs are proliferating with major chipset supplierssampling dual-core solutions in 3Q/4Q12. Spreadtrum and Mediatek will have massproduction on dual-core TD-SCDMA smartphone chipsets in 1Q13 and 2Q13, respectively.Marvell unveiled the PXA988 dual-
30、core TD-SCDMA smartphone solution. Leadcore alsorecently launched a 40nm TD-SCDMA chipset LC1810 with dual-core Cortex-A9 and ARMMali 400 GPU. Coolpad is the first customer of LC1810 with product lunch in October 2012.This will follow by ZTE, Lenovo, Haier, and Tianmai. Leadcore targets to have 28nm
31、 quad-core TD-LTE by mid-2013. We expect Leadcore, Mediatek and Marvell to compete onhigher-end designs, with Spreadtrum still having strong share in the entry level and addingsome initial higher-end devices once it has its dual core chipset available in 2Q13.Figure 10: Upcoming single-chip dual-cor
32、e apps processor + TD-SCDMA basebandMulti-core TD-SCDMAchipsets are coming fromLeadcore, Marvell, Mediatekand SpreadtrumChipset vendorChipset modelAvailabilityBasebandCPU coreClock speedGraphicsGPU performanceCamera supportVideo performanceProcessMarvellPXA9883Q12TD-HSPA/EDGE/GSMDual-core ARM Cortex
33、 A91.2 GHzVivante GC10001,560M Pix/s, 96M Tri/s16-Mpixels1080p Full HD40nmLeadcoreLC18103Q12TD-HSPA/EDGE/GSMDual-core ARM Cortex-A91.2 GHzARM Mali 400550M Pix/s,35M Tri/s20-Mpixels1080p Full HDTSMC 40LPSpreadtrumSC88204Q12ETD-HSPA/EDGE/GSMDual-core ARM Cortex-A51.2 GHzARM Mali 400256M pix/s, 30M Tri
34、/s8-Mpixels720pTSMC 40LPMediatekMT65831Q13EHSPA+ / TD-SCDMADual-core ARM Cortex-A71.X GHzPowerVR SGX5441,600M Pix/s, 55M Tri/s8-Mpixels720pTSMC 28nmSource: Company dataTD-SCDMA smartphones pushing down to lower price pointsChina Mobile recently raised its TD-SCDMA terminal subsidy budget from Rmb20
35、bn toRmb26 bn even after only spending Rmb12 bn in 1H12. We believe the carrier subsidiesare also shifting to lower cost phones now that more suitable entry-level smartphones areavailable. We see mass-market TD-SCDMA smartphones (1GHz single core) ASPs fallingtowards Rmb500700 range with some of the
36、 new 2H12 product introductions.Spreadtrum has secured a number of TD-SCDMA wins (noted in the Figure below) with itssolution for this channel.Figure 11: Spreadtrum design wins starting to ramp for its 1 GHz single core chipsetTD-SCDMA drawing insubscribers with lower costsmartphonesHaier HT I617Hua
37、wei 8808DK-Touch T800K-Touch T580Lenovo A288tZTE Nova V6500ImageTechnologyTD-SCDMA/GSM TD-SCDMA/GSM TD-SCDMA/GSM TD-SCDMA/GSM TD-SCDMA/GSMGSMHSDPAOperating SystemPixelsProcessorDisplayYesAndroid320x4801Ghz3.5YesAndroid 4.0480x8001 Ghz4.0YesAndroid 2.3480x8001 Ghz4.0YesAndroid 2.3320x4801 Ghz3.5YesAn
38、droid 2.3320x4801 Ghz3.5YesAndroid 2.3320x4801 Ghz3.5Source: Company dataTD-LTE plans to get more aggressiveFrom our checks, CM has completed the tendering of 4Q12 TD-LTE network builds(20,000 TD-LTE base-stations) and will start the 2013 tendering process for 200,000 TD-LTE base-stations as early a
39、s 1Q13. ZTE and Huawei have each secured 30% marketshare in the 4Q12 deployments and we expect a very similar share allocation for 2013.Last week, China Mobile announced that it will, in 4Q12, start the procurement of 200,000TD-LTE mobile terminals (including data cards and handsets). In mid-Septemb
40、er, ChinaChina Smartphone SectorTD-LTE network push on toget service launched in503 October 2012Mobile also invited bidding for 35,000 TD-LTE mobile terminals for network trials. BesidesQualcomms MSM8960, a handful of chipset vendors now offer multi-mode TD-LTEsolutions. These include Hisilion, Inno
41、fidei, Leadcore, Marvell, Mediatek, Sequans,Spreadtrum, and a few others. With aggressive push and MIIT likely to issue 4G licensesto CM as early as at the end of 2013, we see TD-LTE smartphones becoming mainstreamin 2014E when over 200,000 TD-LTE base-stations are in operation.Figure 12: LTE-FDD/TD
42、D chipsets from major chipset vendorsChipset vendorModelBasebandLTEDL/UL speedMIMOProcess nodeMarvellPXA1802TD-LTE/LTE FDDLTE Category 4150/50 MbpsN/A40LPLeadcoreLC1761LTD-LTE/LTE FDDLTE Category 4150/50 Mbps4x2 MIMO40LPSpreadtrumSC9610TD-LTELTE category 3100/50 Mbps2x2 MIMO40LPMediatekMT7138TD-LTE
43、/ FDD-LTELTE category 4100/50 MbpsN/A65LPHisiliconBalong 710TD-LTE/LTE FDDLTE Category 4150/112 Mbps2x2 / 4x2 MIMO40LPSource: Company dataBeneficiaries on TD-SCDMASpreadtrums mainstream still consists of entry level smartphonesSpreadtrums volume is still on low-cost EDGE and TD-SCDMA platforms where
44、 itscustomers are introducing sub US$100 smartphones. The company is planning its firstWCDMA chipset and TD-SCDMA dual core chipset for sampling in 4Q12 and 1Q13production, with quad core one quarter later. The companys timeline has been 12quarters later than peers but is still gaining share by targ
45、eting lower-cost designs in thelower-end segment of the market. We raised estimates recently to the high-end of 3Q12guidance and model a 4Q12 decline below street due to ramp of multiple branded Chinesecustomers for TD-SCDMA. We model smartphones ramping from 27.5 mn units in 2012 to90 mn in 2013 as
46、 the company adds WCDMA, multi-core and also grows its EDGE andTD-SCDMA business with a full-year of shipments in 2013 after shipping for only half ayear in 2012.Figure 13: Spreadtrums shipmentsSpreadtrum securing a goodposition in entry levelsmartphonesUS$mn unless notedFeature phones (mn)ASPs (US$
47、)Smartphones (mn)ASPs (US$)Sales by phone type2.5G / 2.75G units (mn)ASPs (US$)TD-SCDMA units (mn)ASPs (US$)WCDMA units (mn)ASPs (US$)Sales by standardGM %Op M%GAAP EPSPro Forma EPS200923.4$4.480.0$0.0010522.3$3.781.2$17.650.0$0.0010536.4%-18.4%-$0.43-$0.63201089.1$3.890.0$0.0034677.4$2.9711.7$9.960
48、.0$0.0034644.0%20.0%$1.29$1.482011198.8$3.380.2$7.79674169.2$2.7229.8$7.170.0$0.0067441.6%20.2%$2.49$2.792012233.0$2.2627.5$6.40701227.4$2.1932.8$6.160.3$7.0070137.4%14.3%$1.75$2.202013F193.3$1.5990.0$5.41794207.1$1.8138.9$5.5337.2$5.4979437.9%15.1%$2.05$2.422014F160.5$1.28148.8$4.47871194.1$1.8040.
49、8$4.6274.4$4.4787138.3%16.1%$2.34$2.712015F124.9$1.05217.8$3.63920188.3$1.8445.6$3.92108.9$3.6392038.4%16.6%$2.51$2.87Source: Company data, Credit Suisse estimatesChina Smartphone Sector2SCDMA603 October 2012Marvellnew multi-core TD-SCDMA / WCDMA platforms for 2013Marvell is launching new chipset pl
50、atforms targeting three variants of smartphonesdual-core TD-SCDMA, dual-core WCDMA, quad-core TD-SCDMA/WCDMA. The PXA986/988is a single platform with software and pin compatibility for dual-core WCDMA/TD-SCDMA(RF833/838 for WCDMA/TD-SCDMA, respectively). Marvell plans to launch the PXA1088quad-core
51、TD-SCDMA+WCDMA solution in 1H13. With a new RF (Sparrow 2), Marvelloffers a “world phone” that works in both TD-SCDMA and WCDMA simultaneously.Figure 14: Marvells chipset platforms for multi-core TD-SCDMA + WCDMAMarvell dual core and quadcore solutions in 2013 couldrestore some of itscompetitiveness
52、TD-SCDMATD-SCDMAMarvellPXA 988MarvellRF838MarvellPXA 1088MarvellRF838World phoneDual-core Cortex-A9Quad-core Cortex-A7MarvellSparrowWCDMAWCDMAPXA 1088Quad-core Cortex-A7MarvellPXA 986MarvellRF833MarvellPXA 1088MarvellRF833Single platform development :Dual-core Cortex-A9Quad-core Cortex-A7Software /
53、Pin compatibleSource: Company dataLeadcore launching a dual-core TD-SCDMA solutionLeadcore is the chip designing arm of the Datang Group. Based in Shanghai, Leadcoreintegrates ARM Cortex-A9 CPU and ARM Mali400 GPU with its own TD-SCDMAbaseband modem to target high-end TD-SCDMA smartphones based on C
54、hinas 3Gstandard, TD-SCDMA. Leadcore recently launched its 40nm LC1810 TD-SCDMA chipsetwith dual-core Cortex-A9. Coolpad is its first customer with product launch in October.Leadcore targets having a 28nm quad-core TD-LTE chipset by mid-2013.WCDMA: Mediatek, Qualcomm and Marvell pushingmulti-core fo
55、r 2013In the China Unicom channel, the smartphone market is splitting into multi core chipsetsfor WCDMA and a broadening tier of lower-end EDGE handsets. Emerging vendors arenow able to offer manufactured product to distributors at prices ranging from US$65 for anEDGE smartphone with 3.5” display, 4
56、GB storage and 2MP camera up to US$185 for adual core smartphone with 4.5” display, 8 GB storage and 8 MP camera.Figure 15: Low-cost smartphone build costs span from low to high-endLeadcore also offering adual core solution on TD-WCDMA low-cost channelled by Mediatek andQualcomms multi-core pushV400
57、0V8V9V11V12BOM Price:TechnologyDisplayOperating SystemCameraPixelsProcessorMemory (RAM/ROM)BatteryChipset$58EDGE3.5Android 2.32MP480x320650MHz4G+2G1400mAhMT6573$105WCDMA4.0Android 2.35MP800x480650MHz4G+4G1500mAhMT6573$125WCDMA4.3Android 4.05MP960x5401 Ghz4G+4G1600mAhMT6575$150WCDMA4.5Android 4.08MP1
58、280x7201 Ghz4G+512M/4G+1GB1600mAhMT6575$185WCDMA4.5Android 4.08MP1280x7201.2GHz Dual Core8GB+1GB1600mAhMT6577Source: Company dataChina Smartphone Sector703 October 2012Dual core designs currently dominated by Mediatek and QualcommChina Unicoms recently launched smartphones focused on mass market dua
59、l coresmartphones from branded Chinese vendors and saw an almost even split of designsbased on Mediatek and Qualcomm. Qualcomm secured wins from Hisense,KTouch/Tianyu, Coolpad, and Huawei while Mediatek was designed into smartphonesfrom Malata, Lenovo, TCL, and ZTE. Shown below are a sampling of som
60、e of the newdevices.Figure 16: Low-cost smartphone build costs span from low to high-endLenovo A789ZTE V889MZTE U960S3TCL S500Coolpad 7290Huawei G600Huawei G330DCoolpad 7266Chipset supplier:MediatekQualcommTechnologyDisplayOperating SystemPixelsProcessor ChipWCDMA4.0Android 4.0.4480x800MT6577WCDMA4.
61、0Android 2.3.6480x800MT6577EDGE4.3Android 2.3.5480x800MT6517WCDMA4.0Android 4.0480x800MT6577WCDMA4.0Android 4.0480x854MSM8225WCDMA4.5Android 4.0.4540x960MSM8225WCDMA4.0Android 4.0480x800MSM8225WCDMA4.0Android 4.0480x800MSM8225Source: Company dataQuad core to push the performance of mass market phone
62、s in 2013Quad core is set to ramp up the capabilities of the low-cost smartphone segment thatmuch furher, nipping at the heels of the tier one vendors high-end offering and givingbranded Chinese companies greater opportunity to gain market share. Just one year afterthis years first quad core Tegra 3
63、 smartphones, Mediatek and Qualcomm will both beoffering mass market quad core 28nm chipsets which should start from US$20 butexpected to quickly drop into the current dual core pricing range of US$1416 (see alsoour Wafer Starts from 28 September on the Qualcomm chipset introduction).Qualcomm unveil
64、ed more details on its new two quad core chipsets last week, the MSM8225Q WCDMA and MSM 8625Q WCDMA + CDMA platform for smartphones. Thecompany also unveiled a higher end MSM8930 which offers support across TD, WCDMA,CDMA and TD-LTE. All the chips will be offered on the QRD (Qualcomm ReferenceDesign
65、), with chipset sampling in late 2012 and commercial device shipments in 1Q13.Qualcomm noted that 50 products were launched to date from 40 OEMs, with another 100designs in progress.Figure 17: Mediatek, Qualcomm and Marvell pushing quad core designs in 2013Mediatek, Qualcomm andMarvell bringing high
66、er-endspecifications to the lower-end of the marketMediatekMT6588QualcommMSM8225Q/8625QMarvellPXA 1088Mass productionBasebandCPU coreClock speedGraphicsGPU performanceCamera supportVideo playbackIntegrated touch proc.Process1Q13EHSPA+ / TD-SCDMAQuad-core ARM Cortex-A71.X GHzPowerVR SGX5441,600M Pix/
67、s, 55M Tri/s13-Mpixels1080p Full HDDigital built-in28nm1Q13EHSPA+ / CDMAQuad-core ARM Cortex-A51.X GHzAdreno 203294M Pix/s, 49M Tri/s8-Mpixels720pN/A28nm1H13ETD-SCDMA / WCDMAQuad-core ARM Cortex A71.x GHzVivante GC10001,560M Pix/s, 96M Tri/s16-Mpixels1080p Full HDN/A28nmSource: Company data, GizmoCM
68、ediatek is matching up closely with Qualcomms release schedule, targeting initialsamples of its Quad Core Cortex A7 chipset (MT6588) also in late 4Q12 with massproduction in 1Q13 and supporting TD-SCDMA + HSPA+. On pure specifications,Mediatek appears to have a slight edge, using a newer Cortex A7 c
69、ore (higher rawChina Smartphone Sectorin 20132012803 October 2012DMIPs/second), more advanced graphics claiming 1080p video playback and digitalprocessing of touch built into the processor.Marvell will also be targeting a similar 1H13 product to Mediateks that also offers TD andWCDMA support and adv
70、anced specifications (Cortex A7, new Vivante graphics core, 16MP camera support, 1080p playback, 28nm process).While specifications are interesting to compare, there is only one factor in securing designwins. Vendors will also select chipsets based on R&D/field support, firmware quality andreliabili
71、ty, overall reference design and solution cost, vendor-customer relationship, andability to match chipset price competitively. Chinese branded companies will likelycontinue to adopt a combination of Qualcomm, Mediatek and soon Marvell once it has amore competitive WCDMA offering in 2013. Whitebox ve
72、ndors, typically with a much fastertime to market and low-cost approach with more local components, are likely to stick withMediatek given its localized and responsive support. Mediatek and Marvell will also havean advantage at China Mobile supporting both TD-SCDMA and WCDMA, whereasQualcomm only re
73、legated TD-SCDMA to its higher-end 8930 and 8960 chipsets.Qualcomm is maintaining its leadership in CDMA 2000 with support in the 8625Q for thatstandard for use on China Telecoms network.LTE still too early to matter in low-cost smartphones in 2013LTE is sampling from each of the vendors but it is a
74、 2014 event at the earliest. With Chinabrands and operators leading the low-cost smartphone push, we do not see LTE matteringfor the mass market until their service is up. We expect 2013 will be about network build-outs and low volume handset trials, 2014 will be about the first meaningful devices.
75、Eachof the major vendors has LTE chipsets sampling to reach the market as commercialservice ramps. At that time, we also expect Qualcomm, which limited LTE to its higher end8930 to also drop LTE baseband support into its lower-end platform.Tablet AP market crowded with Chinese suppliersAndroid based
76、 media tablet market competitiveAccording to IDC, the Android tablet market is seen reaching reaching 47 mn units in 2012(some 78% YoY growth), outpacing the estimated 58 mn iPads with 55% YoY growth.EETimes estimates that nearly 50 mn tablets will be produced in China in 2012, of whichabout 10 mn a
77、re domestic shipments while the remaining are exported. The growthopportunity is tantalizing, though we would note the space is already crowded with unlistedChinese suppliers. A fleet of Chinese suppliers are competing aggressively on (1) productfeatures, (2) product roadmaps, and (3) pricing. Media
78、tek will target a stand-aloneapplication processor for the market in 2013, targeting its broad customer base insmartphones.Chinese tablet vendors undercutting pricesIn China, pricing of a 7-inch capacitive touch screen media tablet featuring a single-coreARM Cortex-A8 processor has fallen to Rmb400
79、(US$65) from previously Rmb600(US$99) in 1Q12. The sharp price fall has been largely driven by turnkey solution fromAllwinner (also known for its Boxchip brand) and hyper competitive landscape. Based onour checks, Allwinner and Rockchip (both unlisted) are shipping 800,000 and 4000,000units, respect
80、ively, as on August 2012. From our checks, ASPs of Allwinners Boxchip A13single-core and Rockchips dual-core RK3066 are now US$5.0 and $US12.0, respectively.Low-priced tablet applications processors migrating to multi-core and 28nmTablet APs for low-priced tablets are also migrating to multi-core an
81、d 28nm as early as2013 given the better pricing (dual-core at US$12 vs. single cores at US$5). To staycompetitive against the likes of Mediatek (MT6577) and NuFront (unlisted) which are stillon 40nm, Rockchips upcoming RK31xx (dual-core ARM Cortex-A9) will be based onGlobalFoundries 28nm HKMG proces
82、s.China Smartphone SectorLTE not a meaningful driverin the low-cost channel yetChina built tabletsapproaching 50mn units inRockchip multi-core chipsetbased on GlobalFoundries28nm process/ Rmb600903 October 2012Figure 18: Android tablet units catching up to iPad120100806040Figure 19: 80% of tablets m
83、ade in China are exported605040302010200020112012E2010201120122013201420152016China - tablet shipment (mn units)Source: IDCiOSAndroidOthersSource: EETimesChina - domestic tablet shipment (mn units)Figure 20: Tablet AP vendors and their flagship productsAllwinnerRockchipNuFrontIngenicFoundedHeadquart
84、ersShipments (units/month)Key tablet winsFlagship AP modelMulti-coreCPUClock speedGraphicsProcess nodeASP (US$)2007Zhuhai800,000iNet NanoPadA10/A13Single-coreARM Cortex-A81.2GHzARM Mali-40055nm5.02001Fuzhou400,000Archos 80xsRK3066Dual-coreARM Cortex-A91.6GHzARM Mali-400 MP40nm12.02004GuangzhouN/AACH
85、O C908NS115Dual-coreARM Cortex-A91.5GHzARM Mali-400 MP40nmN/A2005BeijingN/AAinol Novo 7JZ4770Single-coreXBurst (MIPS32)1.0GHzVivante GPU40nmN/ASource: Company dataAllwinner (Boxchip)the low-priced turnkey vendorFounded in 2007 and based out of Zhuhai, Allwinner (private) is a leader in mediaprocessi
86、ng solutions. It has licensed the ARM Cortex-A8 and ARM Mali-400 MP GPU,bringing high definition displays within a low-power envelope to a wide range of Androidbased connected consumer products, from tablets to multimedia systems for automotive.Allwinner is a direct competitor of Rockchip. Its table
87、t AP products are well known as theBoxchip brand and are widely adopted by low-priced tablet makers in China. With strongturnkey solution support, Allwinners Boxchip A10 / A13 single-core ARM basedprocessors at 1.0GHz / 1.2GHz (55nm/40nm) is enabling 7-inch / 10-inch tablets to bepriced at Rmb400 /
88、Rmb600. Based on our checks, Allwinner is shipping 800,000 units ofBoxchip APs since August 2012. Notable wins include iNet NanoPad and Efun M900.Rockchipaggressively migrating to 28nmRockchip (private) is a leading Chinese fabless semiconductor company that developsARM based APs running on Android.
89、 Founded in 2001, Rockchip started as a developer ofprogrammable MCU for digital audio cassette players for educational market, in which itstill maintains 70% share. Rockchip has its headquarter and main R&D centre in Fuzhou.It also has offices in Beijing, Shanghai and Shenzhen, which focus on sales
90、 and marketing.It employs nearly 500 people, of which 50% are software engineers. In the past few years,Rockchip has transformed itself from an AP vendor addressing the media player and tabletmarket. Notable tablet wins are Archos 7. In April 2012, Rockchip showcased its 40nmRK3066, a dual-core ARM
91、Cortex A9 chip with a quad-core ARM Mali-400 GPU. In July2012, Rockchip licensed Arteris NoC (network on chip) Interconnect IP for its latest 28nmChina Smartphone SectorAllwinner single-coreBoxchip A10/A13 enabling7/10-inch tablets at Rmb400Post 40nm RK3066 in2Q12, Rockchip taped out28nm RK31xx thro
92、ughGlobalFoundries03 October 2012chip. By September 2012, Rockchip has taped out its 28nm RK31xx (dual-core ARMCortex-A9) through GlobalFoundries.NuFrontcharging with multi-coreFounded in 2004 by a group of US returnees, NuFront (private) is a high tech companydedicated in the areas of wireless broa
93、dband communication and broadcast, IC design,video search, digital imaging technology, intelligent transportation system and digitalmedical. It rose to fame in 2010 when it announced the development of a dual-core ARMCortex-A9 implemented in 40nm with clock speed exceeding 2Ghz. With over 500employe
94、es, NuFront has three subsidiaries in Shanghai, Guangzhou and Shenzhen. Itslatest Apps Processor is NS115 40nm dual-core ARM Cortex-A9 processor at 1.5GHzand Mali400. Notable tablet win is Archo C908. In September, NuFront licensed the newarray of high-end CPU/GPU cores from ARM, including ARM Corte
95、x-A15 and Mali-T658.Ingenica victim of stiff competitionListed in the Shenzhen stock exchange since mid-2011, Ingenic Semiconductor is afabless company based out of Beijing, China. Its proprietary XBurst CPU is based onMIPS32 architecture. MIPS is a competitor of ARM. Since its inception in 2005, In
96、genichas shipped more than 30 mn XBurst based chipsets, having penetrated into e-dictionary,PMP, eBook and tablet market. Its latest flagship product is JZ4770, a high performancelow power AP targeting for mobile devices. JZ4770 is powered by a 1GHz XBurst CPUcore and equipped with a rich set of per
97、ipherals. With Android, Linux, WinCE, RTOS OSsupporting and WiFi/3G/Bluetooth/TV module connecting, this SOC can provide excellentmobile internet experience. Ingenic is supplying JZ4770 to Ainol Novo 7 tablets, theworlds first a sub-$100 Android 4.0 tablet. Due to the slowdown in Chinese consumerele
98、ctronics market and intense competition, Ingenics 1H12 revenue / earnings declined by48% / 52%, respectively. Its 1H12 gross margin was 53.6% versus 59.2% a year ago.Vivanteenabling some of the emerging companiesFounded in 2004, Vivante (private) is a graphics processor IP company, licensing its“Mob
99、ile Visual Reality” cores to semiconductor companies. Vivante is headquartered inSunnyvale, California, with R&D centres in Shanghai and Chengdu. Its graphics coreshave been adopted in applications processors targeting the emerging markets. Its keycustomers include Marvell, Freescale, Ingenic, ICT (
100、Godson) and Rockchip.Stock implicationsThe China market is passing 200 mn units in 2012, with Mediatek over 100 mn, Spreadtrumover 25 mn and Qualcomm likely near Mediateks shipment rate. While each of thecompanies are matching up roadmaps closely, we expect share gains from local Chinesevendors, bro
101、ader product lines at wider price ranges and push from next year beyond Chinainto export channels to continue healthy unit growth. Main near-term risks are: (1) the normalinventory corrections which we would monitor following builds into the upcoming GoldenWeek and (2) price cuts which will limit bu
102、llish calls for GM expansion. The segment alsoneeds to maintain the push on innovation and integration to keep competitive and drivevolumes at a competitive margin. We are RESTRICTED on Mediatek but see an attractiveopportunity at reasonable valuations for Spreadtrum and RDA in chipsets and AAC inac
103、oustic components (speaker-box, receivers and MEMS microphones).Mediatek, Inc. (2454.TW, NT$312.50, RESTRICTED)Mediatek continues to see strong growth in the market and we now expect the company toreach 105110 mn units, above its 90 mn target announced on its 2Q12 earnings call. Thecompanys supply c
104、onstraints eased in early September, which allowed a double digitMoM sales growth in September and 3Q12 sales growth in the low-mid 20% QoQ versus1318% guidance. 4Q12 is only down modestly as smartphones continue to ramp up toChina Smartphone SectorNuFront developing chipsetsbased on ARMs newestCort
105、ex A15Vivante driving Marvellsgraphics coreRDA and Spreadtrum havean attractive opportunity at areasonable valuation; AACbenefiting from its high-endApple/Samsung and lowpriced Chinese exposure1003 October 2012offset feature phones and seasonal DTV decline. Demand is splitting into higher-end dualco
106、re (30% of 4Q12) and lower cost EDGE (4050% of 4Q12). With most volume in 3Q12still on EDGE or 1GHz single core and 4Q12 seeing some price cuts, the company stillexpects a flattish profile on GMs in-line with CS.Spreadtrum (SPRD.OQ, $20.34, OUTPERFORM V, TP $26.50)Spreadtrum is seeing a strong ramp
107、on low-cost EDGE and TD-SCDMA platforms whereits customers are introducing sub US$100 smartphones. The company is planning tointroduce multiple products for early 2013 ramp including (1) feature phone with integratedBluetooth/FM, (2) first WCDMA chipset on single core and then dual core refresh shor
108、tly afterand (3) dual core TD-SCDMA and EDGE chipset, and in 2Q13 Quad Core platform. The dualcore opens up the higher-end market where 30% of Mediateks volume is shifting andWCDMA which opens up to China Unicom and the export channel. Spreadtrum is tradingunder 10x 2012 EPS and has close to $4 cash
109、/share. We rate the stock asOUTPERFORM with US$26.50 target price based on 13x 2013 US GAAP EPS and 11x2013 Pro Forma EPS, still a sizeable discount to Mediatek and in line with US fablesspeers. The stock is reasonable with valuation still low, roadmap looking healthy, andsmartphone designs ramping
110、up.RDA Microelectronics (RDA.OQ, $10.40, OUTPERFORM V, TP $17.00)RDA is leading on integration in feature phones, with very small die in its 8851 basebandintegrating Bluetooth+FM on die. Volume ramped from 7 mn units in July to 10 mn+/monthfor August and September, enough we believe to allow the com
111、pany to achieve the high-end of 3Q12 sales guidance and keep GMs at least in-line. The company is also close totaping out a design that also pulls in the power amplifier. RDA will sample its first EDGEsmartphone solution in 1Q13 for 2H13 volumes, with Quad core coming for them in 2014.We keep 2012 i
112、ntact at US$1.25 and 2013 at US$1.50, with estimates supported by rampup of cost competitive low-cost baseband, connectivity and in 1H13 upgrade to 3G poweramplifiers. We maintain OUTPERFORM and NT$17 target price based on average2012/2013 EPS. We stay positive into a good roadmap that keeps RDA com
113、petitive oncosts while adding content into baseband, connectivity, RF and into 3G/smartphones.ZTE Corp. (0763.HK, HK$12.44, NEUTRAL, TP HK$11.75)ZTE recently launched several multi-core smartphone models, including the latest ZTEGrand Era (based on Nvidias quad-core Tegra 3). While these new models
114、have higherprice points and thus higher gross margin, we expect ZTEs handset blended grossmargins to remain flattish at 15-16% in 2H12 due to pricing pressure in the highlycompetitive low-priced market. We estimate that China Mobiles 4G TD-LTE networkbuilds with 20,000/2000,000 TD-LTE base-stations
115、in 2012/2013, respectively, and willgenerate only 0.7%/6.7% of 2012/13E revenue for ZTE. We still see some weaknesses in3Q12 earnings (late-October) as we see (1) low-margin overseas telco equipmentcontracts still likely to dampen earnings, (2) TD-LTE revenue is likely very light in 2H12E,(3) new Af
116、rican telco equipment contract may not come in until 4Q12E.AAC Technologies Holdings, Inc. (2018.HK, HK$28.00, OUTPERFORM, TP HK$35.00)AACs 50% share at Apple is sustained as it remains the first source in speaker-box andreceivers. While Goertek is now a second source gaining share from Dover who is
117、 stillsuffering production automation issues, it is not a threat to AAC, in our view. GivenEarPods is likely to offer 5x higher absolute dollar profit versus speaker-box, we believeGoerteks main focus is on the EarPods. In fact, Goertek is capacity limited in speaker-boxand the situation is unlikely
118、 to improve for the next few quarters. We thus see AACs firstsource position at Apple solidified. Rising penetration of speaker-boxes and MEMSmicrophones in mid-range / low-priced Chinese smartphones is another key driver. AACspenetration in low-priced (Rmb700-1,200) China smartphones remains low (5
119、%). Ourchecks indicate sees strong design pipelines of low-priced models adopting speaker-boxes and MEMS microphones. We expect AACs 3Q12E revenue / earnings to grow by14.5% / 8.8% QoQ on the back of strong iPhone 5 ramp-up and China smartphone builds.China Smartphone Sector1103 October 2012Companie
120、s Mentioned (Price as of 02 Oct 12)AAC Technologies Holdings, Inc. (2018.HK, HK$28.00, OUTPERFORM, TP HK$35.00)ARM Holdings (ARM.L, 570 p)China Mobile Ltd. (0941.HK, HK$84.20, OUTPERFORM, TP HK$101.00)China Telecom (0728.HK, HK$4.47, NEUTRAL, TP HK$4.50)China Unicom Hong Kong Ltd. (0762.HK, HK$14.18
121、, OUTPERFORM, TP HK$18.80)Freescale Semiconductor, Inc. (FSL, $15.03, OUTPERFORM V, TP $16.00)Goertek (002241.SZ)Ingenic Semiconductor (300223.SZ)Lenovo Group Ltd. (0992.HK, HK$6.71, OUTPERFORM, TP HK$7.50)Marvell Technology Group Ltd. (MRVL, $14.87, OUTPERFORM, TP $18.00)MediaTek, Inc. (2454.TW, NT
122、$310.00, RESTRICTED)Qingdao Haier Company Ltd. (600690.SS, Rmb12.00)QUALCOMM, Inc. (QCOM, $63.93, OUTPERFORM, TP $75.00)RDA Microelectronics (RDA.OQ, $10.40, OUTPERFORM V, TP $17.00)Spreadtrum Communication (SPRD.OQ, $14.78, OUTPERFORM V, TP $26.50)Taiwan Semiconductor Manufacturing (2330.TW, NT$80.
123、00, OUTPERFORM, TP NT$87.00)TCL Communications (2618.HK, HK$4.10)ZTE Corp. (0763.HK, HK$22.55, NEUTRAL, TP HK$11.75)Disclosure AppendixImportant Global DisclosuresRandy Abrams, CFA & Yan Taw Boon each certify, with respect to the companies or securities that he or she analyzes, that (1) the views ex
124、pressedin this report accurately reflect his or her personal views about all of the subject companies and securities and (2) no part of his or her compensationwas, is or will be directly or indirectly related to the specific recommendations or views expressed in this report.See the Companies Mention
125、ed section for full company names.3-Year Price, Target Price and Rating Change History Chart for 2018.HK2018.HKClosingTargetDatePrice(HK$)Price Initiation/(HK$) Rating Assumption333529-Nov-1020-Feb-1220.620.626.378NCOX2826282922-May-1225-Aug-1228-Sep-1224.226.2282829352318NCO13HK$820-Feb-12Closing P
126、riceTarget PriceInitiation/AssumptionRatingO=Outperform; N=Neutral; U=Underperform; R=Restricted; NR=Not Rated; NC=Not CoveredChina Smartphone Sector1267467849622429530003 October 20123-Year Price, Target Price and Rating Change History Chart for MRVLMRVLClosingTargetPricePriceInitiation/23Date12/4/
127、098/17/12(US$)18.0610.54(US$) Rating Assumption22182119172218151311US$9Closing PriceTarget PriceInitiation/AssumptionRatingO=Outperform; N=Neutral; U=Underperform; R=Restricted; NR=Not Rated; NC=Not Covered3-Year Price, Target Price and Rating Change History Chart for 2454.TW2454.TWDateClosingPrice(
128、NT$)TargetPrice Initiation/(NT$) Rating Assumption6606246609-Oct-0921-Oct-092-Nov-09504516486.5660496503N574524503474N509513547ON475 4752-Feb-101-Mar-1022-Apr-103-May-1016-Jun-1017-Jun-10498518560538501509513660678547ONX424374324274NT$16-Jun-10440370350U315 315280N U255 260306270300260300NR2-Jul-102
129、8-Jul-10425.54424754407-Sep-106-Oct-10472412.5475370UClosing PriceTarget PriceInitiation/AssumptionRating2-Nov-108-Mar-1119-Apr-112-May-1123-May-117-Jun-1128-Jul-117-Sep-1131-Oct-116-Jan-125-Apr-12387.5341309316.5310313.5266282.5318278.5274.5350315295315300280255260306270300NUNO=Outperform; N=Neutra
130、l; U=Underperform; R=Restricted; NR=Not Rated; NC=Not Covered30-Apr-1225-Jun-1229-Jun-12253280.5273260300RChina Smartphone Sector13RR3303 October 20123-Year Price, Target Price and Rating Change History Chart for RDA.OQRDA.OQDateClosingPrice(US$)TargetPrice Initiation/(US$) Rating Assumption19171718
131、171818171/7/1114.5517OX164/26/115/5/115/12/115/13/116/13/118/5/1111/9/112/10/1213.21312.7312.739.9810.08913.5118161717.5RORO1513119US$71/7/11OOO5/4/127/4/1211.6310.121817Closing PriceTarget PriceInitiation/AssumptionRatingO=Outperform; N=Neutral; U=Underperform; R=Restricted; NR=Not Rated; NC=Not Co
132、vered3-Year Price, Target Price and Rating Change History Chart for SPRD.OQSPRD.OQClosingPriceTargetPriceInitiation/3939Date11/17/1111/18/111/6/123/1/129/14/12(US$)28.9619.2613.8820.28(US$) Rating Assumption39 OX3321.526.53429241933O2227149US$411/18/11Closing PriceTarget PriceInitiation/AssumptionRa
133、tingO=Outperform; N=Neutral; U=Underperform; R=Restricted; NR=Not Rated; NC=Not Covered3-Year Price, Target Price and Rating Change History Chart for 0763.HK0763.HKClosingPriceTargetPriceInitiation/3939Date24-Feb-10(HK$)(HK$) Rating AssumptionX343536343325-Feb-1025-Mar-1015-Apr-1028-Jul-1020-Aug-102
134、7-Oct-1010-Nov-1131-Mar-1225.97225.55626.13920.95822.33326.2522.3520.6538.66735.33336343332.530ONCOX29241914HK$924-Feb-10ONC10-Nov-11O3028232212 12N26-Apr-1213-Jun-1219.2815.3282313-Jul-1216-Jul-1212.510.462211.5NClosing PriceTarget PriceInitiation/AssumptionRating23-Aug-1230-Aug-1211.810.361211.75O
135、=Outperform; N=Neutral; U=Underperform; R=Restricted; NR=Not Rated; NC=Not CoveredThe analyst(s) responsible for preparing this research report received compensation that is based upon various factors including Credit Suisses totalrevenues, a portion of which are generated by Credit Suisses investme
136、nt banking activities.Analysts stock ratings are defined as follows:Outperform (O): The stocks total return is expected to outperform the relevant benchmark* by at least 10-15% (or more, depending on perceivedrisk) over the next 12 months.Neutral (N): The stocks total return is expected to be in lin
137、e with the relevant benchmark* (range of 10-15%) over the next 12 months.Underperform (U): The stocks total return is expected to underperform the relevant benchmark* by 10-15% or more over the next 12 months.China Smartphone Sector1444%14%03 October 2012*Relevant benchmark by region: As of 29th May
138、 2009, Australia, New Zealand, U.S. and Canadian ratings are based on (1) a stocks absolute totalreturn potential to its current share price and (2) the relative attractiveness of a stocks total return potential within an analysts coverage universe*,with Outperforms representing the most attractive,
139、 Neutrals the less attractive, and Underperforms the least attractive investment opportunities.Some U.S. and Canadian ratings may fall outside the absolute total return ranges defined above, depending on market conditions and industryfactors. For Latin American, Japanese, and non-Japan Asia stocks,
140、ratings are based on a stocks total return relative to the average total return ofthe relevant country or regional benchmark; for European stocks, ratings are based on a stocks total return relative to the analysts coverageuniverse*. For Australian and New Zealand stocks, 12-month rolling yield is i
141、ncorporated in the absolute total return calculation and a 15% and a7.5% threshold replace the 10-15% level in the Outperform and Underperform stock rating definitions, respectively. The 15% and 7.5% thresholdsreplace the +10-15% and -10-15% levels in the Neutral stock rating definition, respectivel
142、y.*An analysts coverage universe consists of all companies covered by the analyst within the relevant sector.Restricted (R): In certain circumstances, Credit Suisse policy and/or applicable law and regulations preclude certain types of communications,including an investment recommendation, during th
143、e course of Credit Suisses engagement in an investment banking transaction and in certain othercircumstances.Volatility Indicator V: A stock is defined as volatile if the stock price has moved up or down by 20% or more in a month in at least 8 of the past 24months or the analyst expects significant
144、volatility going forward.Analysts coverage universe weightings are distinct from analysts stock ratings and are based on the expectedperformance of an analysts coverage universe* versus the relevant broad market benchmark*:Overweight: Industry expected to outperform the relevant broad market benchma
145、rk over the next 12 months.Market Weight: Industry expected to perform in-line with the relevant broad market benchmark over the next 12 months.Underweight: Industry expected to underperform the relevant broad market benchmark over the next 12 months.*An analysts coverage universe consists of all co
146、mpanies covered by the analyst within the relevant sector.*The broad market benchmark is based on the expected return of the local market index (e.g., the S&P 500 in the U.S.) over the next 12 months.Credit Suisses distribution of stock ratings (and banking clients) is:Global Ratings DistributionOut
147、perform/Buy*(53% banking clients)Neutral/Hold*Underperform/Sell*40%(48% banking clients)(43% banking clients)Restricted 2%*For purposes of the NYSE and NASD ratings distribution disclosure requirements, our stock ratings of Outperform, Neutral, and Underperform most closely correspond to Buy,Hold, a
148、nd Sell, respectively; however, the meanings are not the same, as our stock ratings are determined on a relative basis. (Please refer to definitions above.) An investorsdecision to buy or sell a security should be based on investment objectives, current holdings, and other individual factors.Credit
149、Suisses policy is to update research reports as it deems appropriate, based on developments with the subject company, the sector or themarket that may have a material impact on the research views or opinions stated herein.Credit Suisses policy is only to publish investment research that is impartial
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151、 and cannotbe used, by any taxpayer for the purposes of avoiding any penalties.See the Companies Mentioned section for full company names.Price Target: (12 months) for (2018.HK)Method: Our target price of HK$35.00 for AAC Technologies Holdings Inc. is based on 16x P/E multiple of our 2013E EPS. The
152、stock has beentrading at an average 12-month forward P/E of 15x since 2010.Risks: Risks that may impede achievement of our target price of HK$35.00 for AAC Technologies Holdings Inc. include: (1) share loss at keycustomers such as Apple and Samsung, (2) Key customer product launch delays, (3) weaker
153、 orders from customers that are under producttransitioning (Nokia/RIMM).Price Target: (12 months) for (MRVL)Method: $18 PT represents 14.4x FY14 EPS (11.5x ex-Cash), in line with peer group at 14.6x.Risks: We see two primary risks to MRVLs achievement of our $18 target price. (1) Marvells hard drive
154、 business offers limited growth and risk fromSSDs (solid state disks). The company generates 40% of its revenues from hard drives, where it has captured more than 50% market share. (2)MRVL faces encroachment at its primary baseband customer, RIM (Research in Motion), which faces rising competition.P
155、rice Target: (12 months) for (RDA.OQ)Method: Our target price of US$17 is based on 12x our average FY12/FY13 EPS and at the upper end of peers. We think the target price is justifiedbecause of the rapid growth of a low base in RF and connectivity and gross margin improvement from cost reduction.Risk
156、s: Our target price of US$17 has following risks: 1) Concentration on handsets and small customers, 2) Lack of tier one customers, 3) Risk ofbunding and integration from base and competitors, 4)Risk of more aggressive price competition, 5) Technology migration risk, 6)Concentratedshare ownership and
157、 180 day lock-up, and 7) Litigation risk.Price Target: (12 months) for (SPRD.OQ)Method: Our target price of US$26.50 for Spreadtrum is based on 13x our GAAP 2013 EPS forecast, in-line with its peer group.China Smartphone Sector1503 October 2012Risks: Downside risks to our US$26.50 target price for S
158、preadtrum include: 1) concentration on handsets and small customers, 2) high exposure tomaturing feature phones, 3) semiconductor inventory cycle, 4) foundry manufacturing risks and 5) pricing pressure given competitive environment.Price Target: (12 months) for (0763.HK)Method: Our target price of H
159、K$11.75 on ZTE Corporation (0763.HK) is based on a 12x 12-month forward EPS.Risks: Risks to our target price of HK$11.75 include: price competition, instability in non-China emerging markets where ZTE is exposed to,equipment capex upside/downside, foreign exchange losses, production yield issues, de
160、lays of TD-LTE roll-outsPlease refer to the firms disclosure website at www.credit- for the definitions of abbreviations typically used in thetarget price method and risk sections.See the Companies Mentioned section for full company names.The subject company (MRVL, 2454.TW, RDA.OQ, 0763.HK) currentl
161、y is, or was during the 12-month period preceding the date of distribution of thisreport, a client of Credit Suisse.Credit Suisse provided investment banking services to the subject company (MRVL, 2454.TW, RDA.OQ) within the past 12 months.Credit Suisse provided non-investment banking services, whic
162、h may include Sales and Trading services, to the subject company (0763.HK) withinthe past 12 months.Credit Suisse has received investment banking related compensation from the subject company (MRVL, 2454.TW, RDA.OQ) within the past 12months.Credit Suisse expects to receive or intends to seek investm
163、ent banking related compensation from the subject company (MRVL, 2454.TW, RDA.OQ)within the next 3 months.Credit Suisse has received compensation for products and services other than investment banking services from the subject company (0763.HK)within the past 12 months.As of the date of this report
164、, Credit Suisse Securities (USA) LLC makes a market in the securities of the subject company (2018.HK, MRVL,RDA.OQ, SPRD.OQ).As of the end of the preceding month, Credit Suisse beneficially owned 1% or more of a class of common equity securities of (2454.TW, 0763.HK).This holding is calculated accor
165、ding to U.S. regulatory requirements which are based on Section 13(d) of the Securities and Exchange Act of 1934.Credit Suisse has a material conflict of interest with the subject company (2454.TW). Credit Suisse is acting as the Joint non-exclusive financialadvisor and facilitator to Mediatek on th
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