Samsung sales surge boosts shares at Wolfson as audio deal confirmed
SHARES in Wolfson Microelectronics jumped sharply on Tuesday after the company confirmed that its audio components are being used in Samsung’s latest smartphone.
The Edinburgh-based chip developer said its Audio Hub product had been chosen by the South Korean technology giant for inclusion in its flagship Galaxy S III handset, which launched in Europe at the end of last month.
Analysts said the news had been expected, as Wolfson has supplied devices for a number of recent Samsung products, but confirmation of the deal sent shares in the company soaring 10p, or 5.3 per cent, to end the day at 200p.
Samsung said on Monday that it expects global sales of the handset to exceed ten million in July, making it the group’s fastest-selling smartphone.
Shin Jong-kyun, president of the group’s mobile communications business, said it has struggled to keep up with demand because of component shortages, but a spokesman for Wolfson said it has been able to meet all its supply commitments.
Wolfson reported sales of $156.9 million (£100m) for 2011 and last month said it was confident of returning to profitability as its smartphone and tablet customers ramp up production. The current market consensus is for a full-year sales figure of around $175m for 2012.
However, Nick James, an analyst at Numis Securities, said market expectations for the group’s sales looked too low as a result of Samsung’s forecasts and upgraded Wolfson’s shares from “hold” to “buy” following yesterday’s announcement.
Wolfson’s Audio Hubs, which offer high-definition audio for portable multimedia devices, account for more than 70 per cent of the company’s revenues. The components are used in a range of products, including the BlackBerry 9790 phone and Sony’s PS Vita handheld game console.
During the first quarter, Wolfson customers asked it to contribute its technology to around 70 new designs, described as “design-in” contracts, and the group said it is benefiting from industry trends to move audio functions away from central processors and into separate audio devices. Wolfson has a history of working with Samsung, having already provided audio technology for its Wave and Galaxy S devices.
The new phone uses Wolfson’s low-power WM1811 hub, which improves sound quality while reducing power consumption, enabling handset makers to extend their battery life.
Chief executive Mike Hickey said: “Our continued success with Samsung, particularly within its range of smartphones and tablets, is testament to the unrivalled quality of our HD Audio Hubs, and the unique features in our products that allow manufacturers to create differentiated audio experiences.”
Samsung launched its first Galaxy handset two years ago in a bid to counter the success of Apple’s iPhone.
According to market researcher Strategy Analytics, the South Korean company recently overtook Apple as the world’s largest smartphone manufacturer, shipping 44.5 million units in the first quarter of 2012, compared with 35.1 million iPhones.
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