Wed, Sep 16, 2009 - Page 12 News List

Elan shares rally as lawsuit ends

By Lisa Wang  /  STAFF REPORTER

Shares of local chip designer Elan Microelectronics Corp (義隆電子) rallied over 5 percent yesterday on expectation that an end to a nine-year-long patent lawsuit with US rival Microchip Technology Inc may give a boost to its microcontroller business.

A judge from Hsinchu District Court ruled that Elan did not infringe Microchip’s patent relating to the manufacturing of 8-bit microcontrollers as the Chandler, Arizona-based company had claimed. Microchip had tried to restrict Elan from exporting chips made with the technology.

With the dispute over, Elan said it planned to resume supplying its 8-bit microcontrollers to customers with tailored new designs, which would help boost the company’s sales, a statement said.

Elan’s stock price jumped 5.21 percent, or NT$2.45, to close at NT$49.9 yesterday after briefly touching NT$49.8 earlier. The benchmark TAIEX index rose 1.23 percent.

Microcontroller business made up about 22 percent of Elan’s overall revenues of NT$704 million (US$21.57 million) in the first quarter of this year, down from 32 percent in the first quarter of last year, said the company’s financial statement submitted to the Taiwan Stock Exchange.

Microcontrollers used to be the biggest sale driver for Elan, headquartered in Hsinchu. Microcontrollers are used in a wide range of automatically controlled devices from automobile engine control systems to toys.

Now, Elan is better known for its multi-touch solutions including its new ITO touchpad and multi-touch modules, which can be used in portable devices such as smartphones and notebook computers.

Elan’s net income halved to NT$6.65 million, or NT$0.17 a share, in the first two quarters of this year, from NT$158 million, or NT$0.44 per share, a year ago, after booking a sharp increase in non-operating expenses, financial statements filed to the Taiwan Stock Exchange showed. Revenues slipped almost 10 percent year-on-year to NT$2.03 billion in the first half.

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