Thu, Dec 15, 2005 - Page 10 News List

Nvidia set to gobble up ULi

ACQUISITION The US graphics chip developer sees its purchase of the local chip designer as a way to help enhance its ties in the Asian region

By Lisa Wang  /  STAFF REPORTER

Graphics chip developer Nvidia Corp said yesterday it is set to acquire Taiwanese company ULi Electronics Inc (宇力電子) for US$52 million in cash in a bid to expand its communications processor business and strengthen ties with its Asian customers.

ULi, established in 2002, is a computer chip design house controlled by chipmaker ALi Corp (揚智) and contract chipmaker United Microelectronics Corp (UMC, 聯電), which jointly over 60 percent of the firm.

Computer motherboard makers Asustek Computer Inc (華碩) and Micro-Star International Co (微星) and computer vendor Acer Inc are among the local companies on ULi's customer list.

LEVERAGE TALENT

"The acquisition provides an opportunity for Nvidia to leverage a very talented engineering team in order to expand our MCP [media and communications processor] initiatives while building closer relationships with customers in Asia," Nvidia chief executive Huang Jen-hsun (黃仁勳) told reporters in Taipei yesterday.

The need for an increased presence in Taiwan is also one of the major reasons why Nvidia is buying ULi.

TAIWAN PRESENCE

"Taiwan is central to Nvidia's operation. Nvidia manufactures, sells and partners here," Huang said.

The US-based company, the world's largest AMD core logic supplier, has been seeking to establish a bigger presence in Taiwan.

UMC and Taiwan Semiconductor Manufacturing Corp (TSMC, 台積電) make chips for Nvidia.

Nvidia, in turn, supplies chips to Asustek Computer Inc, Compal Computer Inc (仁寶電腦), Quanta Computer Inc (廣達電腦) and other local companies.

ON OFFER

The company said it will pay ULi NT$19 in cash for each outstanding share and stock option, which would make the acquisition worth about US$52 million

"We think this is a fair deal," Huang said.

The offer represents about a 20-percent discount, compared to ULi's share price, which averaged NT$24.15 yesterday on the gray stock market.

But ULi said its net value is about NT$11 per share.

APPROVAL NEEDED

The acquisition is expected to be completed either during Nvidia's first quarter of 2007, or the first three months of next year.

ULi is scheduled to hold an extraordinary shareholder's meeting on Jan. 6 to get approval for the deal with Nvidia.

The acquisition is also subject to the government's approval.

With Nvidia's graphics business and brand power, ULi president Alex Kuo (郭聰鈴) said the combination would help his company expand in the chip market over the long term.

ULi expects earnings per share to rise to around NT$1.5, Kuo said without providing details.

Nvidia said operating income more than doubled to US$71.5 million in the July-September period versus US$28.8 million a year ago on better revenue of US$583.4 million.

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