Wed, Jul 18, 2012 - Page 13 News List

Tablets drive chip maker Elan’s growth

CHIPS WITH THAT?The company expects strong demand for its touch chips and touch screens to boost revenue this quarter, offsetting slow sales in other products

By Lisa Wang  /  Staff reporter

Elan Microelectronics Corp (義隆電子), which supplies touch-panel chips for Google Inc’s Nexus 7 tablets, yesterday said revenue and shipments this quarter would grow significantly from last quarter, as customers are set to ship new devices equipped with touch screens.

The strong outlook would be an extension of the Hsinchu-based chip company’s stellar performance last quarter, when it posted its best quarterly net profit in 11-and-a-half years.

Net profit grew 49 percent year-on-year to NT$300 million (US$10 million), or NT$0.78 per share, last quarter, from NT$201 million, or NT$0.42 a share, in the prior quarter, thanks to a 3.5-fold expansion in shipments of touch-panel chips used in smartphones and tablets. That also represented growth of 23 percent from a year ago.

This quarter, strong demand for its touch chips and touch screens would drive up shipments and revenue, offsetting a 5 percent quarterly decline in shipments of microcontrollers and chips for computer peripherals, such as interactive joysticks, amid faltering end product demand, Elan chairman and president Yeh I-hau (葉儀皓) told a quarterly conference in Taipei, where investors and analysts packed the room.

“We are seeing a growth trend in [revenue in] the third quarter,” Yeh said, although the “growth rate will be less than the second quarter.”

Elan’s revenue expanded at a 30 percent quarterly rate to a record NT$1.89 billion last quarter from NT$1.46 billion in the first quarter, in which more than half came from chips used in touch panels and touch pads.

Yeh forecast that chips for smartphone touch screens would grow by at least 20 percent or might even double to 3 million to 5 million units from 2.5 million units last quarter, with the fastest growth coming from the Chinese market.

Tablet touch chip shipments would expand by up to 76 percent quarterly to 3 million units from 1.7 million, including 1.3 million units for Google’s Nexus 7, Yeh said.

Shipments of touch pads for notebook computers and Ultrabooks are expected to increase 12.68 percent quarter-on-quarter to 16 million units from 14.2 million last quarter, as some customers are scheduled to ship the first batch of touch-enabled Ultrabooks this quarter, Yeh said.

Elan has received about 30 projects to supply touch chips for Windows-enabled computers from first-tier clients, he said.

Last week, Elan announced that the company became the world’s first touch chip firm to receive a hardware certification for the upcoming new Windows 8 operating system.

Gross margin would rise from last quarter’s 38 percent, aided by better-cost touch chips for Windows 8-enabled computers, Yeh said.

Elan’s stock tumbled 2.65 percent to NT$45.90 yesterday, ahead of the company’s investors conference, underperforming the TAIEX’s 0.52 percent gain.

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