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MediaTek buys 19% stake in Ali Corp

MediaTek Inc (聯發科技), the world's largest designer of chips for DVD players, said it paid NT$555 million (US$16.4 million) for a 19 percent stake in Ali Corp (揚智).

MediaTek bought the stake on Monday, the company said in a statement to the Taiwan Stock Exchange. MediaTek faces price competition from rivals in Taiwan and the US. The Hsinchu-based company aims to use Ali's technology to help offer new products more quickly, analysts said.

"The stake purchase is mainly for research and development reasons," said James Huang (黃建銘), an analyst with Sinopac Holdings (建華金控). "It should help shorten time to market for MediaTek products."

MediaTek, the first company to make a DVD player chip that combines functions of several chips into one, had its smallest quarterly profit gain on record in the first three months of this year as intensifying competition squeezed margins.

The company saw its first-quarter net income rise 10 percent to NT$4.2 billion, or NT$6.58 a share, from NT$3.8 billion, or NT$6.16 a share, a year earlier.

MediaTek will probably gain several seats on Ali's board, which will provide access to the company's chip design technology, Huang said.

MediaTek won't win any advantage by increasing its stake in Ali, he said.

Ali soared NT$1.10, or 7 percent, to NT$18 in Taipei. MediaTek gained NT$1, or 0.4 percent, to NT$264.
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