Chips&Media focuses on the video codec business
Demand for video codecs has increased because of COVID-19
Sales increased 30% from 15.4 in ’21 to 19.9 billion won in ‘22
New markets for video codecs have been opening
Chips&Media plans to strengthen overseas business
"The demand for 'video codecs' will increase explosively, centering on future automobiles.”
SEOUL, September 19th, 2021 - "About 8 to 10 cameras are installed in a self-driving car. Video codec technology is essential for most automobile cameras.” said Steve Kim, CEO of Chips&Media, on the 16th of September. "In addition to cameras, video codec technology will be employed a lot in in-vehicle infotainment."
Among technologies for semiconductors, Chips & Media focuses on video codec which is a design asset (IP). Video codec functions to record and play videos on electronic devices such as cars, home appliances, and security.
In particular, Chips&Media is an R&D company whose entire sales were made only in return for semiconductor IP. The two major sources of income are licenses received when supplying design assets to semiconductor companies, and royalties received when selling semiconductors made using them.
"COVID-19 pandemic was a crisis and an opportunity for the past two years. When COVID-19 occurred in early 2020, license contracts were canceled or delayed one for another. For this reason, sales in the first half of the year reversed and suffered a crisis. However, as 'stay at home' became common in the COVID-19 pandemic, sales of home appliances and automobiles surged, and the demand for video codecs also increased.” also said CEO Kim. "As the fourth industrial era was moved up due to the COVID-19, video codec technology, which was previously used in cars, home appliances, security, and mobile, has been expanded to new fields such as servers (data centers), video conferencing, metaverse, and so on."
For this reason, sales of Chips & Media increased 30% from 15.4 billion KRW in 2020 to 19.9 billion KRW in 2021. In the first half of this year alone, it posted 11.2 billion won in sales, up 53% from 7.3 billion won in the same period last year, and is highly likely to surpass the record high performance again this year. During the same period, the operating profit reached 3 billion KRW, and the profit margin reached 27%.
CEO Kim expected that the company's earnings will continue to grow in the second half of this year despite the global economic downturn due to inflation and interest rate hikes. "As stocks of finished products accumulate around the world, there is some volatility in royalty income.” Said CEO Kim. "However, as video codec licensing opportunities expand to new fields such as cars for the future, video conference, and metaverse, the results will continue solid.”
Korea Investment Partners, the largest venture capital (VC) in Korea, paid attention to the mid-/long-term growth potential of Chips & Media and decided to acquire 26.5% of the 34.50% stake held by Telechips. In practice, Chips & Media recently completed the stock transfer contract.
"Chips&Media and Korea Investment Partners are discussing ways to develop the company further " said CEO Kim. "First of all, we plan to strengthen our overseas business by increasing the number of overseas branches in the U.S., Japan, China, Taiwan, and so on. In addition, we are considering establishing a branch office in Europe. As the era of 8K UHD video is expected to begin from next year, we are making more R&D investments to secure additional 8K-related video codec technologies."