Wed, Dec 22, 2010 - Page 12 News List

MStar plans first 3G phone chips

STAR SHIP ENTERPRISE:In the first three quarters of this year, MStar made NT$4.57 billion in net profit on revenues of NT$25.47 billion, according to the company’s prospectus

By Lisa Wang  /  Staff Reporter

Searching for its next growth engine, local TV chip designer MStar Semiconductor Inc (開曼晨星) yesterday said it planned to ship its first chips for use in 3G mobile phones in the first half of next year in China.

In addition, MStar plans to offer smartphone chips next year.

In August, MStar shipped its first batch of chips used in 2G feature phones to customers, mostly Chinese cellphone makers, which sell some of their products to emerging markets such as India.

That would put MStar in direct competition with the nation’s biggest handset chip designer, MediaTek Inc (聯發科), which dominates China’s 2G handset chip market.

“MStar entered the handset chip market this year. As a latecomer, we hope we can duplicate our [success in] TV and monitor businesses,” MStar co-founder and chairman Wayne Liang (梁公偉) told an investor conference ahead of the company’s debut on Friday.

The Hsinchu-based chip designer expects to raise NT$9.66 billion (US$316 million) by selling 32.2 million common shares at NT$300 per share through an initial public offering (IPO) on the local stock market.

MStar, which started as an LCD monitor chip designer, became the world’s biggest TV chip designer last year, only four years after entering the market.

“We believe the Chinese handset chip market is big enough to have one more player ... We believe there will be major opportunities for growth in the future,” Liang said.

Handset shipments in China are expected to grow 12.5 percent to 180 million units this year and increase further to 240 million units in 2014, according to market researcher International Data Center.

Liang declined to reveal the company’s internal target for its new handset chip business. The Chinese-language Commercial Times reported on Monday that MStar was targeting a 20 percent share of the handset chip market in developing countries.

Liang said the company’s business would continue to grow next year, helped by growing contributions from mobile phone chips and an increase in TV chip sales. LCD TV and monitor chips currently account for over 90 percent of the company’s overall revenue.

In the first three quarters of the year, MStar made NT$4.57 billion, or NT$11.33 per share, in net profits on revenues of NT$25.47 billion, according to the company’s prospectus.

The company’s net income nearly doubled from NT$2.49 billion, or NT$8.85 a share, in 2008 to NT$4.82 billion, or NT$14.1 a share, last year.

Gross margins improved to 42.89 percent last year from 42.27 percent in 2008.

MStar started as a small chip design house with a workforce of 200, but now employs a staff of about 25,000, mostly engineers, around the world.

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