Taiwan Chip Designers Counter Downward Trend in Global Economy

Taiwan, with the world’s second-largest chip design industry, has some companies that have countered a slump in the global economy by tapping emerging markets such as China. The strategy has helped the chip designers boost sales.
MediaTek Inc., the world’s seventh-largest chip designer, said in an Oct. 30 statement that its third-quarter revenue of NT$28.1 billion (US$856.9 million) rose 5.1% from NT$26.7 billion in the same period a year earlier primarily because of strong sales in China. The company, which counts on mobile phone chips for most of its revenue, had sales growth that outpaced gains in the overall handset industry.
The worldwide mobile phone industry felt the impact of the global financial crisis in the third quarter of 2008, U.S. market research firm IDC said in an October 30 statement. Mobile phone manufacturers shipped a total of 299.0 million handsets in the third quarter, up 3.2% from last year, according to IDC.
MediaTek started making mobile phone chips about five years ago and it sold them primarily to handset makers in China. Robust demand in China after the Olympic Games this year together with handset customers’ production increases helped MediaTek expand market share, the company said.

Tianjin has a huge potential market for chips. According to statistics, the amount of phones produced in Tianjin makes up of 24% of that in China. For every four phones in mainland, there is one produced in Tianjin. The amount of LCD produced in Tianjin adds up to 460,000, which comprises 10% of the total amount produced in China. Digital cameras produced in Tianjin are more than 4000,000, occupying about 8% percent of that in China. The amount of LSI is more than 570,000,000, about 5% of that of China. Apart from Motorola and Samsung, there are many companies related with IC design industry in Tianjin, which supply a good investing environment.

Still, many of Taiwan’s chip designers could not escape the downturn in the global economy. For eleven of Taiwan’s listed chip designers, their overall third -quarter revenues fell by more than 19 percent to NT$39 billion from NT$48.4 billion in the same period a year ago. The revenue figures came from monthly reports that the companies provide to the Taiwan stock exchange authorities.

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