03.15.2001
Faraday becoming a serious contender in IP

• Faraday Technology (5404 'Zhi Yuan'), the largest local IC design service company in Taiwan, yesterday announced February revenue on its Intellectual Property (IP) business of NT$32.6m, a MoM increase of 51%. With a higher gross margin on IP of around 65%, Faraday believes overall gross margin in 1Q01 may reach 42%, up 2% on 1Q00.

• Last year, Faraday began providing a unique service by combining its IP and Application-specific Integrated Circuit (ASIC) services. The new service was widely taken up by both local and overseas customers. With the popularity of the new service and with the market trending toward system-on-a-chip (SOC), Faraday predicts IP revenue may reach NT$250m in 2001, accounting for 8% of total revenue.

• We believe Faraday is fairly valued at the current share price. We recommend HOLD pending further developments.

AngelLo@Primasia.com +886-[0]2-2547-8865