UPDATE 1-Taiwan's Mediatek hikes Q3 sales forecast

(Adds analyst quotes, details)

By Argin Chang

TAIPEI, Sept 5 (Reuters) - Taiwan's top chip designer Mediatek Inc (2454.TW) on Friday sharply raised its estimate for third-quarter sales growth to 22 to 25 percent due to robust handphone demand in emerging markets such as China.

Analysts had generally expected the firm to revise its target upwards, but the scope of the rise caught some off guard.

"I'm not too surprised with Mediatek's upward revision. But their latest growth figure came to me as a little surprise," said Eric Chen, an analyst at BNP Paribas.

In July, Mediatek said its third quarter sales would grow 8-10 percent from the previous three months and that its gross profit margin would be flat during the same period, after its second quarter net profit fell by a third to T$5.1 billion ($160 million).

That 8-10 percent estimate was lower than some forecasts, with BNP Paribas saying in a report in late August that it expected Mediatek's third quarter sales to rise 18 percent, while Macquarie Research on Wednesday put the figure at 15-20 percent.

"Our figures should be raised accordingly since the company lifted its guidance," BNP Paribas' Chen said, but said he would not adjust its forecast immediately.

Mediatek is likely to benefit from robust cellphone demand in China, where the handset manufacturing supply chain is outperforming the global market, analysts said.

China telecom firms are also spending aggressively to upgrade their cellphone networks, a move that is expected to boost demand for mobile phones.

Mediatek said on Friday its latest forecast was based on strong orders in emerging markets such as China and India.

"We made the current adjustment mainly due to better-than-expected sales of handphones in July and August in emerging markets," the company said in a statement. "That boosted our clients' orders for cellphone chips in September."

As a fabless chip company, Mediatek designs microchips for mobile phones, DVD players and digital TVs and then contracts the manufacturing out to foundries, or contract chip makers.

Mediatek's forecast came just before trading hours. Shares of Mediatek ended 0.3 percent higher, outperforming the main TAIEX index's 1.64 percent decline. (Writing by Lee Chyen Yee; editing by Jonathan Hopfner)