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Chips&Media Seizes Market Opportunities Amid US-China Semiconductor Conflict
Chips&Media Seizes Market Opportunities Amid US-China Semiconductor Conflict, Emerging as a Prominent Technology for On-device AI as a Replacement for NVIDIA
Seoul, South Korea - May 29, 2024
[The Korea Herald- Investment 360] Chips&Media, the leading global provider of video IP, has announced its intent to strengthen its market position through its advanced IPs optimized for the rapidly expanding artificial intelligence (AI) sector.
In a Q&A session shared by IR Kudos manager Kang Sang-gu, Chips&Media discussed its first-quarter performance results and future strategies in a report released on the 29th.
"Most AI chips currently used in data centers are NVIDIA's graphic processing units (GPUs). However, the ongoing US-China semiconductor conflict has triggered a demand for alternatives to NVIDIA's GPUs in China," stated Chips&Media. "As more domestic and international companies build their own cloud infrastructures to reduce costs and enhance security, the demand for Chips&Media's IP licensing projects is increasing."
Chips&Media is also bolstering its presence in related markets by developing IP optimized for on-device AI, which prioritizes low power consumption, and high efficiency with small size and area. "We are already supplying IPs for chips in ARM-based PCs," said Chips&Media. "As the ecosystem for ARM-based PCs expands due to the growth of edge computing, performance improvements, and price competitiveness, our IP licensing opportunities will also increase."
Chips&Media revealed that revenue from last year's self-developed NPU license will commence this year, and it aims to diversify IPs to boost sales alongside its stable cash cow, video IPs.
For the first quarter of this year, Chips&Media reported sales of 4.990 billion won and an operating profit of 9 million won, reflecting a 24.3% and 99.4%, YoY decrease, respectively. Chips&Media explained, "The license agreement has been delayed due to the contraction in investments amid global economic uncertainty," and emphasized, "We expect this delay to be temporary, with sales resuming soon. The proportion of fixed costs, primarily labor, is high while fluctuating costs are low, resulting in a significant operating leverage effect. Like ARM, a global IP company, we aim for an operating profit margin of approximately 40% when sales stabilize."
Meanwhile, Chips&Media's stock stood at KRW 25,600 as of 09:31 a.m., up 2.20% from the previous trading day. Over the past week, Chips&Media stock has risen by 30.47%.
Chips&Media is currently the only domestic company delivering IP to Qualcomm's X Elite chip for AI PCs. Notably, its NPU is making significant inroads into the AI data center market.