[Click eStock] "Chips&Media Expected to Maintain Royalty Revenue Growth"

Eugene Investment & Securities analyzed on November 5 that Chips&Media is expected to see continued growth in royalty revenue, as it recorded its first mobile royalty sales from a major big tech company, referred to as Company G. The firm maintained its "Buy" investment rating and target price of 24,000 won.

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Chips&Media posted consolidated sales of 6.6 billion won and an operating profit of 1.5 billion won in the third quarter. This represents a decrease of 5.9% and 11.6%, respectively, compared to the same period last year. Park Jongsun, a researcher at Eugene Investment & Securities, explained, "The year-over-year decline in performance was due to a 19.3% decrease in license revenue caused by delays in some projects," and added, "Sales from Chinese semiconductor companies also fell by 39.2% year-over-year as the industry environment weakened."

However, Park also pointed out some positive aspects in the third-quarter results. He noted, "With the inclusion of royalty revenue from the U.S.-based Company G, total royalty sales increased by a stable 13.3% compared to the same period last year," and emphasized, "The royalty revenue of 2.9 billion won marked the highest level in nine quarters."

Eugene Investment & Securities forecasts that Chips&Media’s sales and operating profit in the fourth quarter will reach 10.4 billion won and 3.3 billion won, respectively, up 14.0% and 11.9% year-over-year. Park stated, "With the expansion of the on-device artificial intelligence (AI) market, Chips&Media is broadening promotions for its neural processing unit (NPU) IP to existing clients and expanding business to new global customers, which is expected to be beneficial." He added, "We anticipate royalty revenue will surpass the 3 billion won mark for the first time in twelve quarters."

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