China's 3G network provides bright spot amid global slump

Recessions in many nations of the world may be depressing stock markets and other economic activity, but the build out of China's 3G network is providing a boost to some chip makers.

China, which boasts more mobile phone users than anywhere, made building out its 3G network a priority alongside the massive $585 billion economic stimulus package the government announced last year. One company, China Mobile, built 3G networks in several cities across China last year ahead of the Olympic Games, and has continued rolling out its network.

The build out is already boosting some chip makers.

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Recessions in many nations of the world may be depressing stock markets and other economic activity, but the build out of China's 3G network is providing a boost to some chip makers.

China, which boasts more mobile phone users than anywhere, made building out its 3G network a priority alongside the massive $585 billion economic stimulus package the government announced last year. One company, China Mobile, built 3G networks in several cities across China last year ahead of the Olympic Games, and has continued rolling out its network.

The build out is already boosting some chip makers.

Taiwanese chip designer MediaTek, the biggest provider of mobile phone chips to China, on Tuesday raised its first quarter revenue guidance due mainly to stronger demand for handset chips.

The company now forecasts up to a 13% quarter-on-quarter increase in first quarter revenue, compared to a previous forecast of as much as a 16% revenue decline, it said in a statement to the Taiwan Stock Exchange.

MediaTek isn't the only beneficiary.

U.S. communications chip maker Altera on Monday revised up its first quarter guidance slightly as well, also due to demand from China. The company now expects its first quarter revenue will now decline by a maximum 20%, down from the fourth quarter of last year. Previously, it forecast a potential 25% drop.

"The improved outlook is largely attributable to better than expected demand from OEMs providing equipment for Chinese 3G wireless networks," the company said in a statement.

Good news for chip makers tied to China's 3G network is in stark contrast to much of the rest of the industry.

Global semiconductor sales plunged to $15.3 billion in January, down 28.6% compared to the same month last year, according to the Semiconductor Industry Association.

The IDG News Service is a Network World affiliate.