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Interview with Chips&Media CEO Kim Sang-hyun on Advances in Video-Specific NPU IP

Seoul, South Korea – Dec 09, 2024

NPU IP, in Negotiations with a Domestic IPTV Provider, Expecting Positive Outcome Next Year

The only TSMC Open Innovation Partner in Korea

Leaping Forward as a Global Leader in Video IP

“We are in discussions with a leading IPTV provider in Korea and anticipate greater opportunities for the neural processing unit (NPU) IP in the future,” said Kim Sang-hyun, CEO of Chips&Media, in an interview with Asia Business Daily. 

Kim Sang-hyun, CEO of Chips&Media

The CEO shared, "We are currently in the verification stage with the client and expect to achieve a positive outcome before the third quarter of next year."

Chips&Media, founded in 2003, is a video IP provider listed on KOSDAQ in 2015. IP refers to a design embedded in a semiconductor chip that performs specific functions. Chips&Media specializes in video IP, integrated into multimedia semiconductor chips for video recording and playback. Applications vary, including mobile devices, video appliances, and automotive systems.

Last year, the company developed 'CMNP,' an NPU IP equipped with super-resolution (SR) technology that converts low-quality images into high-definition images. Its compact design, 80% smaller than other companies' products, makes it highly power efficient. In September this year, the company secured its first contract with a Chinese artificial intelligence (AI) System-on-Chip (SoC) developer.

"Our NPU IP is optimized for video applications, enhancing image quality. It is expected to be widely adopted for on-device AI in fields like home appliances and cameras," the CEO said. "Opportunities are increasing as the importance of video ramps up in advanced driver assistance systems (ADAS) and autonomous driving solutions. We foresee sustained revenue growth as video becomes more integral to daily life.” 

Chips&Media is also renowned as TSMC’s Open Innovation Partner (OIP), the only one in Korea and one of just 39 globally. “TSMC’s OIP is an innovative technology infrastructure for semiconductor design and manufacturing that reduces design barriers and increases the likelihood of first-time silicon success,” Kim Sang-hyun explained. “Customers and partners within the ecosystem rapidly adopt new technologies, reducing the time from design and mass production to market and revenue generation.”

"We joined TSMC’s OIP while cooperating with TSMC on its initiative to expand the OPI program to include soft IP around 2010. Becoming an OIP involves passing rigorous tests and security checks by TSMC, and we undergo our due diligence every two years to maintain this status,” Kim noted.

The company’s financial performance has shown growth in recent years. Sales rose from 20 billion KRW in 2021 to 27.6 billion KRW last year, with operating profit increasing from 5.2 billion KRW to 7.8 billion KRW. However, the third quarter of 2024 was challenging, with cumulative sales and operating profit declining 11.01% and 56.65% YoY, respectively, to 18 billion KRW and 2.4 billion KRW. “Our revenue primarily comes from the United States and China,” Kim explained. “This year, the economic downturn in China reduced demand for consumer electronics-related chips, resulting in lower royalty revenues and delayed licensing deals.”

Despite these challenges, the company’s future remains optimistic. “The demand for our video IP continues to grow. Next year, we anticipate global licensing opportunities with existing and new customers, with royalties expected to increase, especially in China. We project a growth rate of 10-20% compared to this year,” he said.

Chips&Media is also poised to sign a significant contract with one of the top three global SoC companies next year. “We are discussing IP supply for automotive applications with the SoC firm. Once licensing deals are secured, royalty revenue will follow steadily,” Kim commented.

The company is also set to supply IP for mobile phones for a global tech company. “High-end smartphones rely heavily on advanced cameras. We expect to start earning video IP royalties next year from a licensing agreement established in 2021,” he added.

Furthermore, a contract with a Chinese company expanding into electric vehicles is underway. “This project involves our technology for vehicle applications. After demonstrating our capabilities, including license plate recognition, the client committed to a contract,” Kim revealed.

Chips&Media’s revenue streams are categorized into licenses and royalties. A license generates income when a designed video IP is provided to a semiconductor design company, while royalties are earned from semiconductor chips with embedded IP sold in the market.

In addition, the company is pursuing mergers and acquisitions (M&A). “By year-end, we anticipate having approximately 50 billion KRW available for M&A. We are evaluating multimedia-related companies. It is essential for sustainable growth,” he stated.

To sustain its technological edge, Chips&Media recently established a research center in Daegu. He emphasized, “Both video codecs and NPUs demand ongoing innovation. Our new research center positions us to respond proactively to technological advancements.”

“We aim to be the benchmark company worldwide in the video processing market. With exponential developments in AI and autonomous driving, the image processing market is set to flourish within the next three to four years,” the CEO concluded. “Chips&Media strives to be the gold standard as a global video IP company.”

(https://view.asiae.co.kr/article/2024120615452349739)