A robust wireless and handheld consumer electronics market is one of the key growth drivers for analog solutions specialist National Semiconductor this year, a top company official said yesterday.
National, which creates high-value analog devices and subsystems, is already making gains from its portfolio of higher-value analog products, said Jerry Kao, general manager of National Semiconductor in Taiwan.
"We've actually outperformed the market especially in the standard linear category which includes power, amplifier, data conversion, and interface (solutions)," Kao said. "In this category alone, we grew 28 percent in 2004 compared with the market's eight percent."
National's leading-edge power management products enjoyed a 37 percent growth while the market only rose 24 percent during the said period, he continued.
Headquartered in Santa Clara, California, National specializes in the production of power management circuits, display drivers, audio and operational amplifiers, communication interface products, and data conversion solutions. Its key analog markets include wireless handsets, displays and a variety of broad electronics markets, including medical, automotive, industrial, and test and measurement applications.
National's decision to invest in high-speed, higher-value solutions is now bringing in more revenues for the company, Kao said.
"In the past, we were more focused on general-purpose products," he said. "In 2004, we rolled out a lot of new technologies including our high-speed data conversion solutions."
During the second quarter of fiscal year 2006 which ended November 27, 2005, National Semiconductor reported a net income of US$114.7 million, or US$0.32 per share, on revenues of US$544 million.
National's 2006 fiscal year started in June 2005.
Second quarter revenues were 10 percent higher than the first quarter of fiscal 2006, and 21 percent higher than year-ago revenues. The sequential revenue growth was driven by strong demand from National's wireless handset customers as well as the broader markets served through the distribution channel, the company said.
In the first quarter of fiscal 2006, National posted revenues of US$493.8 million, net income of US$85.6 million, and earnings of US$0.24 per share. Those first quarter results included a US$28 million pre-tax charge for severances, a US$24.3 million pre-tax gain from the sale of a business, and US$5 million of additional one-time income tax expense.
Cash reserves stood at US$970 million while total debt amounted to only US$21.1 million.
"It's a very healthy company," Kao said. "Even our inventories are quite good, and our total assets amount to more than US$2.4 billion."
National's second quarter gross margin was 57.2 percent, a new record for the company. This gross margin was one percentage point higher than the first quarter gross margin and 6.6 percentage points higher than last year's second quarter gross margin of 50.6 percent.
"The improvement in gross margin has been driven by the company's focus on growing its higher-value analog product portfolio," it added.
For the third quarter ending February 2006, National is anticipating that revenues will be sequentially flat to down three percent, Kao said. Assuming this revenue range, gross margin percentage is expected to increase slightly. Operating expenses and capital expenditures are projected to reach US$154 million and US$65 million respectively, he added.
National expects digital signal processing for audio processing, MP3s, wireless devices, and consumer audio such as microphone and speaker arrays to be the leading audio applications in 2006, the official said.
"Our strategy is to focus on solutions that will deliver the highest power output and the lowest noise, and low power-consumption," Kao said.
The executive added that National counts Taiwan among its most important markets. The company operates a design center in the country.
"Right now, we are focusing on TFT panel applications, and we will keep on investing in this area," Kao said.
"We have very important customers in Taiwan who are covering several major markets. It is critical that we keep on cooperating with them for us to come up with new products that will meet the consumers' requirements."