Sales at MediaTek are expected to register a sequential decline of more than 10% in the first quarter of 2012, due mainly to falling sales generated from its 2.5G and 2.75G chip lineup as a result of weak demand for feature phones, according to industry observers.

Orders for MediaTek's 3G solutions have actually been brisk, but a decline in orders for 2.5G and 2.75G chip segment - which accounts for as high as 50-60% of company revenues - would be significant and affect negatively its sales performance during the first quarter, the observers said.

Fewer working days due to the week-long Lunar New Year break is another reason for the anticipated sales decrease, the observers indicated. Moreover, the advancing of some shipments to December also caused MediaTek's first-quarter sales to decrease substantially on quarter, the observers said.

MediaTek's consolidated sales for the fourth quarter of 2011 came to NT$22.62 billion, slightly missing its targeted NT$22.9-24.5 billion. The observers attributed the shortfall to fewer-than-expected orders from China-based clients at the end of December - traditionally the period of inventory rebuilding.

MediaTek mainly supplies mobile phone chips with clients concentrated in China and other emerging markets.