Key ASIC ventures into China

KUALA LUMPUR: Integrated chip (IC) design-based Key ASIC Bhd will venture into China – Asia’s biggest consumption market for consumer electronic products – this year to provide expertise in IT and designing capabilities.

Non-executive director Lai Yit Loong said while there were good ideas provided by the Chinese design partners, they still required assistance in intellectual property (IP), building blocks of the ICs and design services.

“We are getting strong requests from them to help with the building blocks and design services. We are seeing good demand there and will continue to invest our energy in China,” he told reporters on Jan 11 after the launch of the company’s prospectus.

Key ASIC specialises on system-on-chip for consumer electronics and communications and some of the chips include those DVD, voice-over-Internet protocol (VOIP) and Wi-Fi.

Its core competency was the design optimisation capability, where the ICs can be optimised to consume lower power, deliver higher performance with a smaller die size.

It has developed IP or basic building blocks for system-on-chip, including the central processing unit and memory. Lai said Key ASIC was a local IC design house for the local fabless market, with a 39% share.

On the challenges for the consumer electronics industry worldwide and in Malaysia, he said retail spending was driven by product features and consumers would buy if the company could deliver products with good features.

He said the company targets RM31 million profit-after-tax (PAT) for its financial year ending Dec 31, 2008 (FY08) via royalties received from the subscription or recurring revenue of electronic products.

He said recurring revenue would be from sales of these products, which is expected to grow to 28% this year from 24%.

Lai said Key ASIC’s overseas business contributes almost 100% to its revenue with a significant portion originating from Taiwan and the US.

“It is critical for us to establish a stronghold there and we have started making good progress,” he said.

He said a major bulk of the company’s overseas business are channeled via its manufacturing partner SilTerra Malaysia Sdn Bhd, using Key ASIC’s IP and design services.