s Inc. (ADI) for US$350 million in cash to expand its share in mainland China. With the purchase, Mediatek is gaining a global team of around 400 professionals, an established customer base around the world and key patents and intellectual property to boost its competitiveness, the company said.
ADI's major clients include Sharp and Samsung. Its wireless chip business represented around US$230 million in revenue, based on its 2006 fiscal year financial results.
"This is a winning transaction for customers of both companies," Hsu Ji-chang, general manager of Mediatek's wireless business, said in a statement.
The deal confirmed speculation in the market of recent that Mediatek would buy ADI's wireless chip business to establish a firmer foothold in China's 3G market.
Analysts say the deal is positive for Mediatek in the longer term. With the purchase, Mediatek can better compete with rivals such as Texas Instruments Inc. and Infineon.
As a fabless chip firm that contracts manufacturing out to foundries, Mediatek's products have been popular among Chinese handset brands. The company has said it is banking on the potential growth of China's home-grown 3G mobile TD-SCDMA technology to achieve further success.
Mediatek's announcement came after the Taipei stock market closed yesterday, when its shares rose 1.7 percent to NT$600, outpacing a 0.9 percent drop on the main TAIEX share index.
Mediatek indeed has something else to feel happy about. It yesterday announced its August sales, which broke its previous single-month record.
Revenue in August was registered at NT$9.02 billion, a 68.75 percent increase from the same period last year and a 41.18 percent from July.
July sales of NT$6.389 billion were already a single-month record for the company, which engages in designing chips for a wide range of devices such as GPS systems and digital TVs. August sales broke that record and are expected to help Mediatek post higher revenue for the third quarter than previously forecasted, analysts said.
Credit Suisse even forecasted by 2009, GPS systems and GPS handsets with Mediatek chips would see global market shares of 20 percent and 40 percent, respectively.
Cumulatively, Mediatek generated sales of NT$47.959 billion from January to August this year, a 49.65 percent increase from the same period last year.
