Question-and-Answer Session
Operator
(Operator Instructions)
Your first question comes from the line of Li Tang with Pacific Crest Securities. You may proceed.
Li Tang - Pacific Crest Securities
A question on your Q1 guidance. Your guidance seems to be a little bit better than a typical seasonality. What gives you the confidence in your Q1 guidance?
Gilbert Lee
For Q1, the EMS is completely shutdown in February, so we keep saying we have a shorter quarter. In general terms, our ODM model, the sales revenue should be down a little bit. However, we come out a very strong demand for modules and for the feature phone, so generally speaking, we will maintain the flat revenue on that side.
Also, on the design revenue side, we will see a big growth in Q1. That is why we have a very high confidence about our Q1 revenue.
Li Tang - Pacific Crest Securities
Okay, the second question is TD-SCDMA. We have learned the China Mobile will start its handset procurement in Q2. When do you think you will sign your first design contract on TD-SCDMA?
Gilbert Lee
First of all, let’s talk about the China 3G license. Many, many investors keep asking this question. I do not have an authority, so I would like to take this chance to explain to everybody. There has been much speculation around the 3G license grant for a long time. Like other governments, China is like other governments. The government operates at its own pace and acts when ready.
While we do not have any say in the timing, we do have control over 3G in other global markets. That is what we are focused on. We have launched WCDMA, EVDO, and HSDPA in the last year and our international customers contribute 73% of the revenue.
The 3G license in China will not affect TechFaith much. However, TD-SCDMA will be a benefit to us. We have signed an MOU with our top five customers. We believe we will get one contract of TD-SCDMA in Q1, even if the Chinese Government delays the issue of other 3G license.
Li Tang - Pacific Crest Securities
Just looking into 2007, what is your estimate right now on how many contracts you will get on TD-SCDMA and what kind of contribution that will be for you?
Gilbert Lee
It is still too early to say, but currently we already have four domestic customers that have a contract or MOU with us. I just stated we have one top five customer will sign a contract in this quarter. We already tried to sign it before the Chinese New Year, due to so many people are on vacation or over at 3GSM, so we will delay that toward the end of February or beginning of March to secure that contract.
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