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Executives

Leo Li - Chairman and CEO

Shannon Gao - CFO

Analysts

Bill Lu - Morgan Stanley

Quinn Bolton - Needham & Co.

Qin Zhang - JPMorgan

Eric Chen – Daiwa Capital Markets

Ken Hui - Jefferies

Jack Lu - RBS

CK Cheng - CLSA

Spreadtrum Communications, Inc. (SPRD) Q4 2012 Earnings Conference Call February 26, 2013 7:00 AM ET

Operator

Welcome to the Spreadtrum Communications' Fourth Quarter 2012 Results Conference Call. At this time, all participants are in a listen-only mode. Following management's prepared remarks, there will be a question-and-answer session. As a reminder, this conference is being recorded.

Joining the conference today are Dr. Leo Li, Chairman and CEO; and Ms. Shannon Gao, CFO.

Shortly before the start of this conference, Spreadtrum issued a press release announcing its fourth quarter 2012 financial results, which is also available along with the quarterly results presentation on the company's IR webpage at ir.spreadtrum.com. This call is also being broadcast live over the Internet and will be available on the company's website.

Today's call will include forward-looking statements that involve risks and uncertainties that can cause Spreadtrum's annual results to differ materially from management's current expectations. Such forward-looking statements include, without limitations, statements regarding revenue, cost, profit, competition, customers, products, technologies, partners, business models, M&A, shipments, market share and market trends.

Spreadtrum encourages you to review the Safe Harbor statement contained in today's earnings release as well as the risk factors discussed in its Annual Report on Form 20-F filed on April 10, 2012, as well as other documents filed from time to time with the SEC. The company undertakes no obligations to revise or update publicly any forward-looking statements to reflect future events or circumstances.

Today's call will include a discussion of certain non-GAAP financial measures. These non-GAAP financial measures should be considered in addition to and not as a substitute for or in isolation from GAAP measures. A reconciliation of the non-GAAP and GAAP reporting for the period discussed can be found in today's earnings release. All numbers discussed today will be in U.S. dollars unless otherwise noted.

I would now like to turn the call over to Dr. Leo Li. Please go ahead, sir.

Leo Li

Thank you. Welcome, everyone, and thank you for joining us today for a discussion of fourth quarter and full year 2012 results. Fourth quarter revenue reached a record $203.1 million, an 8.1% increase over the third quarter and above the top end of our guidance. Revenues for the full year 2012 reached $725.2 million also a record revenue year for Spreadtrum.

One of our biggest achievements in 2012 was our growth in the smartphone markets. During the year, we grew our smartphone segment from 1 million units in Q2 to more than 30 million units for the full year. This fast successful ramp of our smartphone chipset was a result of a strong expertise in low cost chipset designs and smartphone software and our ability to meet customer needs quickly and effectively with our turnkey solutions.

In addition, our close relationship with the handset-makers' deep understanding our market enabled us to successfully define and deliver advancing class products positioned for the low end where the customer in China and emerging markets are now switching from the feature phones to entry level smartphones in growing volume.

We're now carrying these trends over to our dual core smartphone platform, which is in the final stage of a qualification in China Mobile which will be shipping in TD-SCDMA and EDGE handset in the very near future. The performance of a dual core platform is outstanding compared to the other dual core products and we believe that this will be very successful in bringing the high performance features to the low end and in a range of segments of the smartphone market.

A second major achievement in 2012 is the expansion of our business with the first tier handset makers. Our TD-SCDMA modems are shipping in top end of smartphones including Samsung Galaxy S range, Samsung Galaxy Note II, the HTC One XT and the HTC Desire VT.

In the fourth quarter, we grew this business further. Samsung, the world's largest smartphone vendor, launched a low cost smartphone using our TD-SCDMA smartphone chipset with integrated application processor, the SC8810. Samsung also launched two feature phones based upon our 2.5G products in the markets around the world, including Europe.

Our success with the first tier handset markers across a diverse set of the products that demonstrate the level of the products, the quality and business and maturity that Spreadtrum has achieved, further extended our footprint beyond China handset ecosystem providing even more opportunities for the growth and market share gain.

In 2013, we expect to benefit from several additional key growth drivers. The first one is the rapid expansion of TD-SCDMA markets. China Mobile now expects 120 million units in TD-SCDMA handsets sold through this year. In other words, double the sell-through of 2012.

In January this year, China Mobile sets a new monthly record of 7 million 3G net adds indicating that the subscribers now are reflecting their 2.5G handsets with TD-SCDMA products in a much faster rate than ever before. We believe that our smartphone platform has been a major catalyst of this trend by making a low cost, high quality smartphone affordable to those first-time smartphone buyers.

As a result, obviously I've said, in this low end, high growth segment, we continue to be the leading suppliers of the baseband chips to the TD-SCDMA market in 2012 maintaining more than 50% market share. We will now also address the higher end of the smartphone segments with a launch of dual core and quad core platforms, giving us a broadest and most completed TD-SCDMA product portfolio coupled with our best-in-class communication technology. In 2013, we expect to maintain our leadership position making Spreadtrum the main beneficiary of this significant TD-SCDMA market growth.

The second important growth driver for 2013 is WCDMA. I am pleased to report that in the fourth quarter we began shipping our WCDMA/HSPA+ modem in limited volume and it's now designed into several data cards modem module products. Further, we have now conducted extensive field trials of our WCDMA smartphone platforms and will begin – beginning to design in activities with customers in the coming weeks.

Our quad core platform are on track to samples in late Q2 this year. It will support WCDMA, HSPA+, TD-SCDMA and the multimode [TD/W], giving customers designed leverage across their different quad core smartphone programs. This group of products will enable us to capture the share of the handsets developed for China Unicom networks as well as the devices to develop for exporting to the emerging markets where the transition 3G is just getting started.

The third key growth driver in 2013 is continuing to ship our products mix from 2.5G products to smartphone chipsets, which contribute both higher ASPs and gross margin. In 2012, smartphone contributed 24% of our total annual revenue which stabilized our blended ASP and gross margin despite extreme pricing competition in the 2.5G segment.

In 2013, we expect the smartphone to contribute more than 50% of our chipset revenue. We're now introducing a new smartphone product that we believe can be a catalyst for gross margin improvement in the second quarter and beyond.

Finally, we continue to lay a groundwork for future growth in LTE, our first generation TD-LTE product as the SC9610 already won a datacard design in China Mobile's first 4G procurement that took place in December. We will introduce our second generation LTE products supporting [flight mode] including TD-LTE, FDD-LTE, TD-SCDMA, WCDMA and EDGE in the second half of 2013.

I will now ask Shannon, our CFO, to review our financial highlights for the fourth quarter and this fiscal year 2012.

Shannon Gao

Thank you, Leo. Total fourth quarter revenue was a record $203.1 million, up 8.1% sequentially and 5.7% year-over-year, exceeding our guidance. Total revenue for 2012 was $725.2 million, up 7.6% over 2011. Gross profit for the quarter was $75.3 million, up 7.5% sequentially and down 3.9% year-over-year. Gross margin was 37.1% compared to 37.3% in the third quarter and 40.8% in the fourth quarter 2011. Gross margin in 2012 was 37.3% and has remained stable over the last three quarters.

Operating expense for the quarter were $48.9 million, up sequentially from $44.9 million in the third quarter and up $44.1 million in the fourth quarter 2011. This increase was driven by higher engineering expenses related to the development of new products as well as employee compensation, partially offset by an increase in recognized government subsidies.

Operating expenses for the full year were up 17.8% from 2011 to $190 million as we continue to invest in forward-looking technologies in smartphones, WCDMA and LTE. Operating income in the fourth quarter grew to $26.4 million, up by 5.2% sequentially and down 22.8% year-over-year. Operating margin was 13%, down from 13.24% in the previous quarter and 17.8% in the fourth quarter 2011.

Operating income and the margin for the full year 2012 were $100.9 million and 13.9%, respectively. GAAP net income in the fourth quarter was $24.9 million, up from $23.2 million in the previous quarter and down from $35.2 million in Q4 2011. Non-GAAP net income was $31.2 million, up 6.3% sequentially.

Net income for basic and diluted ADS in the fourth quarter was $0.52 and $0.47, respectively, up from $0.50 and $0.44 in the third quarter and down from $0.75 and $0.66 in the fourth quarter 2011. For the full year 2012, net income for basic and diluted ADS for the year was $2 and $1.79, respectively, down from a net income for basic and diluted ADS of $2.81 and $2.48, respectively, in 2011. Non-GAAP net income per diluted ADS for the quarter was $0.59, up from $0.56 in the third quarter and down from $0.78 in the fourth quarter 2011.

Turning to our balance sheet, as of December 31, 2012, we had $165.2 million in cash, cash equivalents and short-term deposits, a decrease from $190 million as of September 30. In the fourth quarter, we used $3.2 million in cash in operating activities and used $21 million in expenditures related to capital equipment, intangible assets, equity investments and the payment of our third and fourth quarter dividend.

I want to emphasize that in 2013, we expect that we will continue to generate cash at healthy levels. In the fourth quarter, we experienced short-term fluctuations in the timing of payments as many customers sent out prepayments at the end of Q3, and we also had an increase in our accounts receivable in Q4.

Inventory not including deferred costs, as of December 31, 2012 was $128.8 million, a modest increase from $124.5 million as of September 30. Inventory days increased from 86 days in Q3 to 90 days in the fourth quarter. This increase occurred in line with our higher revenue level.

In the fourth quarter we continued to return capital to shareholders. We declared our seventh quarterly cash dividend and distributed $0.10 per ADS on December 31, 2012.

That completes our financial review. I will now hand the call back to Leo for his comments on our outlook for fourth quarter 2013.

Leo Li

Thank you, Shannon. I'd like to now provide the financial guidance for the first quarter 2013. In the first quarter, we expect to achieve the revenue in a range of $180 million to $186 million, which is a sequential decrease of 8.4% to 11.4%. Our guidance is better than typical first quarter seasonality for the market which is usually lower at least 15% or more due to the China New Year holiday. This is because we are seeing continuing good demand for smartphones both before and after Chinese New Year. We expect a flat gross margin relative to first quarter.

I thank you for your time today. Now Shannon and I will be happy to address any questions you may have. Operator?

Question-and-Answer Session

Operator

(Operator Instructions). Your first question today comes from the line of Bill Lu from Morgan Stanley. Bill, please go ahead.

Bill Lu - Morgan Stanley

Hi, Leo. Hi, Shannon. Can you hear me okay?

Leo Li

Yeah, find. Go ahead.

Bill Lu - Morgan Stanley

Okay, great. Thank you, Leo. The first question is, you talked about China Mobile's expecting to sell through about 120 million units of TD this year. What is your expectation for Spreadtrum's gross shipment this year and how does that break out between a single core, a dual core and a quad core? Thanks.

Leo Li

Yeah, 120 million is the public number coming from CMCC for this year. Like I said in my opening statement, we hope that we'll still be leading suppliers for the TD-SCDMA market. I think last year's dominating kind of models are single core. We definitely saw there's more dual core and even quad core products coming in. However, I think we still see the trends of like say the first time buyers are switching from the feature phones to smartphones. So in that regards, the single core or lowest cost smartphone should be there for the highest volume and then the dual core and quad core be less and less.

Bill Lu - Morgan Stanley

Your market share in 2012 was probably more than 60%. Do you think 50% and above is sustainable in 2013?

Leo Li

This is a hope I'm having for Spreadtrum, so we are and like I said we will be introducing a dual core in late Q1 and Q2 and then we'll introduce the quad core in late Q2 and Q3. So with a much better product mix, I hope -- yeah, we will be able to maintain the market share we had before.

Operator

Your next question today comes from the line of Mike Walkley from Cannaccord Genuity. Mike, please go ahead.

Unidentified Analyst

Hi. Thanks for taking my questions. This is [Sid] on for Mike. Leo, just a couple of quick questions. Some of the larger OEMs like Nokia guided to higher inventory levels and a sequentially softer March quarter. Given your design win momentum in the feature phone side at Samsung, I just wanted to see if that's anything you kind of bucked this trend on the feature phones in the March quarter?

Leo Li

Yeah. The designing with the Samsung is a big plus for Spreadtrum that shows -- indicates our quality of the products and the level of maturity of the platforms. I believe I could be wrong, Samsung -- if it's not the largest feature providers, it will be one of the largest ones, right. So with that, I hope the feature phones – because in emerging markets, feature phone is still a major trend there. And then in emerging markets also feature phone numbers still growing there too. And with that -- with the success of designing the Samsung and with the new platforms of our 40-nanometer base, we believe definitely will help Spreadtrum on revenue going further and further.

Unidentified Analyst

Great. Thanks. And just given that TD-SCDMA was so much more stronger in the December quarter and that momentum has carried on into January. What's your expectations for the TD versus EDGE mix in the first quarter and then probably perhaps the first half of the year?

Leo Li

Yeah. For China market -- actually just China alone, you definitely see a much, much higher percentage for 3G namely TD-SCDMA products. However, for the emerging markets outside China, we're definitely going to see more and more EDGE-based smartphones because the 3G network coverage in the emerging markets, for instance like India, right, the coverage is still fairly limited. To have a so-called 3G product there doesn't make a lot of sense and yet EDGE there does well as well. However, back to China, I think -- as I did mention, December and January it is such a high month for China Mobile, so I am very much encouraged that the trends is very strong and then it's transition from feature phones or 2.5G to 3G, this is trended very, very strong which is good for Spreadtrum.

Operator

Your next question today comes from the line of Quinn Bolton from Needham & Co. Quinn, please go ahead.

Quinn Bolton - Needham & Co.

Hi, Leo. Congratulations on the nice results and strong guidance. Leo, just wanted to, if you could, review the timing again for the dual core TD shipments and then the Wideband CDMA? Did you say that the dual core TD would be shipping in volume in late Q1 or early Q2?

Leo Li

Like I said in my opening statement, we are undergoing so-called qualification tests, assessment tests with China Mobile as we speak. So my thinking is the shipping will either happen late Q1 or early Q2, so that will happen during that period of time. On top of that, the [course] of my dual core's higher than almost any other dual core platforms.

Quinn Bolton - Needham & Co.

I was just going to ask that same question for the Wideband CDMA. Can you just again review the timing of when you think the smartphone platforms will be shipping?

Leo Li

Yeah, we have three different kind of products; datacard and then modules and then the feature phones or WCDMA and the smartphones. I guess we have limited shipments in Q4 and Q1 and then we will see more shipments in Q2 and Q3 both for the feature phones, for the emerging market and smartphones to both China Unicom and emerging markets. So the timeline will be Q2 and Q3.

Operator

Your next question today comes from the line of Qin Zhang from JPMorgan. Qin, please go ahead.

Qin Zhang - JPMorgan

Okay, thank you for taking my questions Leo and Shannon. Regarding our dual core product, do you see the pricing environment and margins to be quite different on that as our single core product 8810?

Leo Li

This is a very good question. I think the dual core and quad core products is designed to be a higher end of a smartphones. So actually in terms of pricing pressure, they're always there for semiconductor industry anyway. However, I think maybe not at the severe -- at least the first half of the year as I can see going forward, because of people designing the dual core platforms you can produce a much larger screen which actually the smartphones selling price is much higher also. So there is some tolerance. There are nothing, there is no pricing pressure I am seeing maybe not – at least I can say this, as not intensive or severe as the 2G products.

Qin Zhang - JPMorgan

Thanks. Got it. Also, I believe that our of the 120 million TD handsets for China Mobile in 2013, about half will be for the operative channel and the open channel. Has Spreadtrum adopted different strategy of penetrating these two different channels?

Leo Li

Yes, either for the so-called procurement, center procurement or call it tender, right, or for the open market both of which I think at Spreadtrum, we work with our customers in both our so-called market segments. I think that we proved that last year, we've done that very successfully either for open market or for the so-called tender or procurement markets. So, I think this is more like locally in China. We are the only company handset chipmakers locally in China that shows our so-called local advantage. We understand the customer needs much better, we operate or respond to the customers much more quickly, more effectively. So in that regards, yes, we do have more effective turnkey solutions for our customers.

Qin Zhang - JPMorgan

Okay. Thank you.

Operator

Your next question today comes from the line of Eric Chen from Daiwa Securities. Eric, please go ahead.

Eric Chen – Daiwa Capital Markets

Hi, Leo. Can you talk about the TD-SCDMA market and in terms of the -- let's quantify, in terms of the shipments, the percentages, how many percent will go for the quad core and how many percent will go for the dual core and the quad core and then for the overall market in the year 2013 this year?

Leo Li

Like I said, I think I answered a similar question to Bill Lu, Morgan Stanley; I believe 2012 and 2013 included a few -- there is a very large number of buyers switching from first time to 2G products to 3G. For that regards usually -- I guess usually people tend to switch lowest cost or 3.5 inch type of smartphones where actually the single core is more than enough. Yes, for the more mature buyers, 4-point-something, 3 inch or even 5 inch type of things whereas dual core and quad core platform have been used, I think those are high end and obviously much more costly, right? So my thinking for the 2013 is still a very large number will be single core for China market and even for the emerging market, because like I said we have to consider so-called first time buyers switching from 2G to 3G.

Eric Chen – Daiwa Capital Markets

Okay. I would like to put as a number, can I say that probably 50% for the single core and full year 2013 and upon your expectation?

Leo Li

I think it should be more than 60%. It is dangerous to put numbers there, right? I don't know, can you really write and put just a number right there without making mistakes, so…

Eric Chen – Daiwa Capital Markets

Right.

Leo Li

My belief is more than 50% for singe core, it's a much larger percentage than you think.

Eric Chen – Daiwa Capital Markets

I see. Thank you. And for those, single core, the TD-SCDMA, the smartphone, what kind of end product, the price is? And people talk about the TD is replacing the EDGE smartphone, the low end smartphone in China, so how you seeing this kind of trend? And -- yes.

Leo Li

I think more is the cost depends on the vendors obviously. Even for the same chipsets, someone is selling much higher price. However, for the lowest one we saw like RMB300, RMB400 which is actually much, much cheaper compared with others (inaudible) my platform, other people's EDGE platforms in China market. So that explains why TD-SCDMA 3G products really, really dominate, so taking price from the EDGE products. So I think we saw very strong trends in 3G products in the China market.

Eric Chen – Daiwa Capital Markets

Okay. And in terms of a sell-through, how many percent you'd expect go for the open channel and how many percent will go to the operator therefore in your point of view?

Leo Li

I think according to China Mobile, it should be 50-60 because there subsidies money split into 50-50. So my thinking is -- I think the 120 million maybe a 50-50 according to China Mobile, but I still believe for the open channel, there is going to be more than so-called that 60 million total. So, my thinking is I think open channel again, the number is going to be larger and then larger.

Operator

Your next question today comes from the line of Ken Hui from Jefferies. Ken, please go ahead.

Ken Hui - Jefferies

Thank you for taking my questions. My first question is would you be able to provide a breakdown between your 2G and 3G revenue for the fourth quarter? And my second question is, I think you guided -- you expect your gross margin to improve from second quarter. Would you expect a similar trend for the operating margin as well? Thank you.

Leo Li

To answer the first question, I think we provided the revenue breakdown for like 50% coming from smartphones, right. We do not give more details breakdown – if we break down too much, you're going to figure out exactly what I'm selling to my customer which is kind of competitive sensitive confidential. So, again, I don't give a further breakdown. And then as far as so-called the net income, right, or the operating income is concerned, like I said in opening statement, we continued in invest in the R&D and compared with some of my competitors, we are relatively small in number of people. So we actually – we still need to have a more new product coming out in the coming quarters. So I expect the investment in R&D levels is still pretty high, so not necessarily the first goal, and that my first objective to achieve so-called very high operating margin rather to develop their product first.

Shannon Gao

Ken Hui, we no longer break down our revenue into 2G and 3G products. Instead we break down our revenue into feature phone and a smartphone product because for the feature phone, either 2G or 3G the ASP is very similar. So there we considered them in a same segment. And the breakdown of feature phone and the smartphone is more meaningful.

Ken Hui - Jefferies

I see. And again on the operating margins, so do you have a guidance on when the operating leverage can start to kick it? Is it something that we can expect in this year?

Leo Li

I think I said it in my opening statement by better product mix, introducing more and more products and also by complete replacing my old products to enhancing my new 40-nanometer products, we hope that the second half and later the operating margins will be further improved.

Shannon Gao

As we continue to increase our R&D investment, especially for the new products, the operating margins for the short term would be expected to be flat or slightly down for first quarter. For the future quarters, we expect we'll see the contribution from the new products and the products mix improvement and the operating margin will start to improve.

Operator

Your next question today comes from the line of [Kina Wong] from Merrill Lynch. [Kina], please go ahead.

Unidentified Analyst

Thank you. Thanks for taking my questions. I would like to ask about the export market. So, could you give some breakdown for the export -- for the chipset shipment in export market in terms of EDGE and 3G?

Leo Li

I think there's a majority in my chipset actually for exporting for the emerging markets outside China. Inside China, mostly for 3G like TDs, right? Like I said for the so-called EDGE type of the smartphones, that number is going to be increased. We expect that the coming quarters, looking forward right, would definitely for the not necessarily the 3G per se, rather we saw very strong demand for the EDGE-based smartphones. We did not see a very basic declines for the 2G feature phones. The only thing we saw last year was the ASP of the 2G handsets went down big time for the higher price of the feature phones, most of it will be replaced by the low end, the smartphones.

Unidentified Analyst

Thank you. In other words, how about the WCDMA shipments in -- how much of the shipment is shipping to overseas clients or overseas?

Leo Li

Okay. I think the unique opportunity for us in China is the China Unicom, right, where mostly I think it were for smartphones. However, for the African market say like in the American market, I think there is a demand for feature phones, WCDMA feature phones, because I think 2G networks are very crowded. They want to offload the traffic from 2G network to 3G, even including voice type of a traffic. So for a general market, again WCDMA smartphones will be needed and then some emerging markets feature phone WCDMA will be needed as well. For Spreadtrum, like I said, second and third quarter will be shipping WCDMA and those are the areas that are going to have a big contribution for us because at this moment, I have a tiny, tiny, almost zero revenue contribution from WCDMA business.

Operator

Your next question today comes from the line of Jack Lu from RBS. Jack, please go ahead.

Jack Lu - RBS

Hi, Leo. Two questions for me first. First of all, can you talk about your smartphone shipments for Q4 because you talked about it's more than 18, so I'm just trying to get a number here.

Leo Li

I don't want to give too specific numbers, so it's more than 18.

Jack Lu - RBS

All right. Then can you give us your full year smartphone shipment for 2012? And what's your expectation for 2013? Are you still holding that 80 million to 100 million target?

Leo Li

Yeah, for this year it's 80 million to 100 million this year we still hold that. I think it's an achievable goal for us.

Jack Lu - RBS

Okay. Third question, are you still planning to launch a dual core WCDMA smartphones?

Leo Li

Yes. I think we're going to launch a few and quad core smartphones in third quarter to be safe.

Jack Lu - RBS

In third quarter, okay. So dual core…

Leo Li

The second quarter will be TD-SCDMA, I mean late Q1 and Q2 will be dual core for TDs.

Jack Lu - RBS

Okay.

Operator

Your next question today comes from the line of CK Cheng from CLSA. CK, please go ahead.

CK Cheng - CLSA

Thank you for taking my questions. Leo and Shannon, congratulation for the guidance -- a strong guidance and result. My first question is, when you talk about your EDGE smartphone solution SCA1 you sell to Samsung. Do you have an idea whether they sell to only in China or whether they also sell that into other emerging markets?

Leo Li

No. For the EDGE based so-called smartphones will be sold not necessarily in China, it will be outside China for emerging markets. Like I said to answer other people's question, in China mostly 3G and then EDGE-based products will be totally outside China.

CK Cheng - CLSA

And the second question, and maybe you answered this earlier that for 2013, what's roughly the spilt and your expectation regarding the chipset use in China versus exporting margin for you customers?

Leo Li

Like I said, even for 2012 for 3G products, TDs mostly in China, right? Even EDGE-based products will be outside China. So I don't give you the exact breakdown, the majority of my products will be outside China, even for last year. So this year, it will be more so.

Operator

Your next question today comes from the line of [Wai Bun] from Credit Suisse. [Wai], please go ahead.

Unidentified Analyst

Hi, Leo. I have some questions on LTE, whether you're competitive enough relative to Qualcomm and Marvell? That's my first question.

Leo Li

Yeah, like I said, we can have a second LTE by third or fourth quarter this year. I think we will be a (inaudible) the 12 or 19 bands. If we can achieve that, I think that in terms of communication qualities and others, I think we will be as good as others.

Operator

Your next question comes from the line of [Kina Wong] from Merrill Lynch. [Kina], please go ahead.

Unidentified Analyst

Thank you for follow-up questions, but it's about tablets. Leo, do you have any plan to launch application processor for tablets this year, or next year? Thank you.

Leo Li

This is a good question. I think it will be second half of this year. Mostly my quad core products can address so-called tablets market. I think a dual core a little bit weak on the (inaudible), but at least it's weak. So my thinking is I have so much to do, right, in terms of WCDMA business, in terms of other dual core and quad core business in smartphones. However, I think the tablet is a nicer market to address for us. But my intent as you're going to use quad core products which is a 1080p type of address for swing resolution. So, yeah, the second half of this year maybe we're going after that market segment as well.

Operator

At this time, there are no further questions. I would like to turn the call over to management for closing remarks.

Leo Li

Thank you. We are very pleased with the growth in our smartphone product, our engagement with global first tier handset makers and our outlook for continuing growth in 2013 with more smartphone offerings, new WCDMA and multimode LTE products and the platforms with integrated wireless connectivities. We thank you for your continuing interest and support. Operator?

Operator

Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Have a good day.

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