Question-and-Answer Session
Operator
(Operator Instructions)
Your first question comes from the line of Adele Mao with Susquehanna International Group. Please proceed.
Adele Mao - Susquehanna Financial Group
Hi, I have several questions. First of all, I would like to talk about smart phone. Could you talk about your smart phone gross margin in the quarter?
Defu Dong
Gilbert, please answer this.
Gilbert Lee
Yes.
Defu Dong
I should answer this question, but today I am on business in Paris, so mainly the questions will be answered by Gilbert. Some questions I will answer. Gilbert, go ahead.
Gilbert Lee
The Q3 smart phone gross margin is about 27%. Because we are a follower in the smart phone business, the major players in Taiwan who dominate a very large market share, so we offer lower price to attract more international customer initially.
Smart phone shipment is just ramping up. We cannot enjoy the economies of scale at this stage. However, we believe that the gross margin will be 30% in the long run, even with some price erosion in the future, due to the high-end product and the 3G products we are going to roll out in the coming quarters.
Adele Mao - Susquehanna Financial Group
Okay. Could you just, since your smart phone business is just ramping up, could you talk about your quarter unit trends and ASP, and your expectation for ASP trends going forward?
Gilbert Lee
We started this business in Q2. In Q2, we shipped about, a rough number is 9,000 units, 9K. In the third quarter, it is 15K. At this stage, we think Q4, to be very conservative, we will ship about 40K, 40,000. I think the number will be above that significantly.
Based on this run-rate, for Q4 and Q1 in ’07, we have ordered about 100K per quarter for these two quarters. We just have a huge backlog. We cannot fulfill those orders. We tried to take them up.
Based on those things and all the learning curve on the procurement, it is a logistic issue. I am thinking next year, the whole year, we are shooting for about 400,000 units for the full year.
The ASP, we still maintain $200. Yes, they will have price erosion due to the competition, but I think this is a newer model, the high-end model, more complicated mechanical design, plus the 3G products rolled in, so I think overall speaking, the whole year, the ASP will be around $200.
- To read the full transcript on Seeking Alpha, click here »
