Wolfson is chips in after contracts for Xbox and other gadgets

Published on Wednesday 4 August 2010 16:02

MICROCHIP maker Wolfson Microelectronics yesterday announced it had sold a raft of new products to a series of gadget manufacturers, which will boost sales and drag the firm back into profitability this year.

In the first half of the year the Edinburgh-based firm launched 18 chip products and won deals to supply major consumer electronics firms, including smart phone makers Samsung and LG.

Wolfson said it had also won a deal to supply a new generation game console and an "innovative new gaming accessory", which analysts have identified as Microsoft's new Xbox360 and the Kinect, a motion-sensing game peripheral that was launched last month and is set to be a UK hit for Christmas.

The sales boost follows a poor 2009, after Wolfson lost its biggest client - Apple - and suffered a "product famine" that drove the firm back to the chip-design drawing board. Hickey said the firm had seen the vast majority of products launched last year go from "design-in" testing to mass manufacture.

Of 256 design-ins last year, two thirds were being manufactured in the first half, while Hickey estimates the rest will progress by the end of the year. "That has happened in the first half beyond our expectations," he said. He added that 2009 was a record year for the adoption of design-in for its products but that in the first half of 2010 these deals were already 30 per cent higher, which will further boost sales in 2011.

The firm makes digital-to-analogue sound and microphone chips for mobile phones, TVs and gaming consoles, with "more than 50 per cent" of its business in phones.

The firm said it had upped its spending on research and development by 23 per cent to $21.7m. Hickey said: "You have got to keep bringing out new products every single year that are better than the ones you had before. You can't do that unless you spend the money on R&D."

Analysts suggested Wolfson was "an interesting potential target" as it was debt-free and well capitalised. Hickey said: "We just ignore all that stuff.

The company made a half-year loss of 6.7m, a 17 per cent increase on last year. However the firm said sales grew by more than 10 per cent in the same period.