11.16.2001
Company Visit - Down, but not out

• During our visit, management reiterated that revenue from Harry Potter toys is limited to around 1% of total revenue. Company stated that order visibility is still low and that off-seasonal factors will continue through 1Q02. Still, it expects gross margin in 2002 to rise on the back of ample foundry supply in China. Sunplus moved into Digital Still Camera (DSC) ICs in 2000 and is looking to expand its client base. Meanwhile, TFT-LCD driver ICs and interactive voice recognition ICs are promising new areas. Given that the shares have rallied on Harry Potter-inspired sentiment of late, we recommend investors wait for a pullback in the shares before accumulating.