China's 3G Network Provides Bright Spot Amid Global Slump

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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 (third generation mobile telecommunications) 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 4 trillion Chinese yuan (US$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 percent quarter-on-quarter increase in first quarter revenue, compared to a previous forecast of as much as a 16 percent 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 percent, down from the fourth quarter of last year. Previously, it forecast a potential 25 percent 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 US$15.3 billion in January, down 28.6 percent compared to the same month last year, according to the Semiconductor Industry Association.

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