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Realtek Expands into Indian Telecom and Continues Automotive Market Push

Despite challenges in custom IC design, Realtek's strategic moves in India and the automotive sector highlight its adaptive strategies for growth
r 2379.TW Mid and Small Cap 2000 Tech 350 Semicon 75
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Realtek Semiconductor Corp. has been making some strategic moves to widen its market presence, one of which is the establishment of an India office last year in order to take a piece of the telecom bidding market’s growth. As Nomura Securities noted in its most recent report, this expanded geographical presence underscores Realtek’s commitment to understand Indian market infrastructure and to optimize its solutions for the local region.

On the other hand, Realtek hasn’t confirmed any strategic alliance with Arm with regards to its ASIC business. Furthermore, the company seems to be wary about delving into custom IC designs, which require redesign and tape-out processes that could cost an arm and a leg. Despite that, Nomura Securities believes that the company is willing to go the extra mile to address a customer’s need for differentiation, whether these alternatives are different packaging options or firmware and software modifications.

In any case, the automotive segment continues to be a bright spot, and it’s one in which has Realtek shows some optimism despite the auto industry’s historic preference to work with Tier 1 suppliers than component manufacturers. Realtek seems to have an automotive collaboration strategy that involves not just car manufacturers, but also Tier 1 suppliers, module makers, and platform suppliers. That covers companies like Hon Hai’s MIH platform, showing a shift towards deeper, more integrated partnerships across the entire chain.

Due in large part to its efforts to expand its footprint in new (to itself) segments and its adaptive nature in dealing with business obstacles, Nomura Securities has the company at a “neutral” rating and a price target of 460 yuan. It’s also expecting to see Realtek roll out additional pieces beyond automotive Ethernet chips, signaling that we’ll probably hear a lot more from this company in the coming years.

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