MegaChips Corporation
Results for the First-Half
in Fiscal Year ending March 31, 2008
（Securities Code No：6875）
Shigeki Matsuoka
President and Representative Director
http://www.megachips.co.jp/
Nov., 2007
1
CONTENTS
1． Results for the 1H in Fiscal Year ending March 31, 2008・・・ 3
2． Forecasts for the Fiscal Year ending March 31, 2008 ・・・ 10
3． Business Plan for the Medium-term ・・・・・・・・・・・ 12
4． Highlights
・・・・・・・・・・・ 28
2
Results for the First-Half
in Fiscal Year ending
March 31, 2008
3
Consolidated Statement of Income
LSI business
System
business
Changes
from
(2) to (1)
Changes
from
(3) to (1)
2008.3
2007.3
2008.3
Results for
1H (1)
Results for
1H (2)
Forecast
for 1H (3)
24,186
16,995
24,300
42.3%
- 0.5%
Operating profit
1,942
1,230
1,460
57.9%
33.0%
Sales
1,269
1,409
2,000
- 9.9% - 36.6%
- 294
25,456
1,600
1,534
1,627
- 89
18,405
1,079
1,067
531
0
－
26,300
38.3%
1,460
48.3%
1,460
43.8%
1,420 206.4%
－
- 3.2%
9.6%
5.1%
14.6%
65.67
21.49
57.31 205.6%
14.6%
（¥ Millions）
Millions）
Sales
Operating profit
Sales
Operating profit
Consolidated Recurring Profit
Net income
Net income per
share（
share（¥）
4
Operations and Results for ASIC Business
Sales
（¥Billions）
40
30
35.98
Sales grew year on year, and
exceeded the plan.
４Q
21.62
20
３Q
The healthy performance of
software-storage LSI for portable
game consoles was a primary
factor in the sales growth.
２Q
10
２Q
１Q
0
2007.3
１Q
2008.3
5
Operations and Results for ASSP Business
Sales
（¥Billions）
6.04
Sales grew year on year, but the
plan was not achieved.
6
The shipment of new LSI for
digital still cameras has begun in
the second quarter. However, we
had decrease in revenue in the
first half of this year due to the
changeover of the product cycle.
OFDM demodulation LSI and
decoder LSI for one- segment
digital terrestrial broadcasting
contributed to growth.
４Q
4
３Q
2
0
２Q
１Q
2007.3
2.56
２Q
１Q
2008.3
6
Operations and Results for System Business
Sales
（¥Billions）
2.68
Sales fell year on year, and the
plan was not achieved.
3
４Q
2
1
0
３Q
Sales grew for video monitoring
equipment for dedicated
customer use, thanks to a new
product launch in 2Q. However,
sales fell for existing products
sold under the house brand.
1.27
２Q
２Q
１Q
2007.3
Sales began for new self security
products in 2Q.
１Q
2008.3
7
Consolidated Balance Sheet
(Million yen)
2007.9
2007.3
Assets
Current assets 30,905
Cash and cash equivalents
4,309
Receivables
21,718
Inventories
4,256
26,040
4,737
18,316
2,357
- 428
3,402
1,899
Fixed assets
6,761
6,301
460
Tangible fixed assets
164
194
6,403
160
154
5,986
Intangible fixed assets
Investment & other assets
Total assets
37,666 32,342
(Million yen)
Change
4,865
Liabilities
Current liabilities
Payables
Short-term debt
Income taxes payable
Fixed liabilities
2007.9
14,451 10,446
Total liabilities &
Net asset
Change
4,005
7,493
6,000
28
4,640
4,000
968
2,853
2,000
-940
2,058
2,202
-144
12,648
3,862
19,693
1,463
37,666 32,342
5,324
4
40 Total liabilities 16,510
417 Total net assets
21,156
5,324
2007.3
Assets increased ¥5,324 million from the end of the previous term. Current assets and fixed assets grew ¥4,865 million and ¥460 million, respectively.
Among current assets, cash and cash equivalents decreased ¥428 million, inventories grew ¥1,899 million, and notes and accounts receivable increased
¥3,402 million.
Fixed assets rose, because of ¥417 million growth in investment and other assets.
Liabilities increased ¥4,005 million from the end of the previous term. By item, accounts payable and short-term debts grew ¥2,853 million and ¥2,000
million, respectively.
Net assets expanded ¥1,463 million from the end of the previous term, thanks to a positive balance created by a capital increase attributable to net income
and other factors and a capital decrease with the distribution of profits, including the payment of dividends.
8
Consolidated Cash Flows
(Million yen)
2008.3 1H 2007.3 1H
2007.3
Change
Cash flows from operating activities
- 1,445
1,134
- 1,919
- 2,579
Income before income taxes and minority interests (+)
1,422
-3,391
- 1,898
2,841
-717
1,044
-747
-1,919
3,044
- 500
2,855
-4,527
- 1,387
1,597
-862
378
-2,644
21
- 203
-217
-555
1,570
4,309
- 2,000
- 302
- 361
5,135
832
- 660
2,633
4,737
-2,579
- 253
- 1,931
- 826
- 2,832
Decrease (+) / increase ((-) in receivables
Decrease (+) / increase ((-) in inventories
Increase (+) / decrease ((-) in payables
Income taxes refunded (+) / paid ((-)
Cash flows from investing activities
Cash flows from financial activities
Cash and cash equivalents
Free cash flows (Cash flows from operating activities
+ cash flows from investing activities)
Cash flows from operating activities generated expenditures totaling ¥1,445 million. Factors behind this result include ¥1,422
million in income before income taxes and minority interests, receivables growth of ¥3,391 million, inventory growth of ¥1,898
million, payables growth of ¥2,841 million, and ¥717 million in income taxes paid.
Cash flows from investing activities generated expenditures totaling ¥555 million. The acquisition of long-term prepaid expenses
was among the main causes of the result.
Cash flows from financing activities generated income totaling ¥1,570 million. The income was attributable to factors such as
higher short-term borrowings.
9
Forecasts for the
Fiscal Year ending
March 31, 2008
10
Forecasts for the Fiscal Year ending March 31, 2008
Forecasts have not been revised from the previous release in May 14th, 2007.
2008.3
(11/5
forecast)
(1)
（¥ Millions）
Millions）
LSI
business
System
business
ASIC
ASSP
(5/14
forecast)
(2)
2006.3
Results for
whole year
(3)
42,000
42,000
35,979
8,000
8,000
6,040
50,000
50,000
42,020
Operating profit
3,500
3,500
3,173
Sales
5,800
5,800
2,675
100
100
-187
55,800
55,800
44,696
Operating profit
3,600
3,600
2,920
Recurring Profit
3,600
3,600
2,869
Net income
2,650
2,650
1,519
106.92
106.95
61.34
Sales
Operating profit
Sales
Consolidated
2007.3
Net income per
※１
share（
share（¥）
※１ Standard calculating will be fluctuated based of exercise a right of stock option and pay back.
11
Changes
from
(2) to (1)
Changes
from
(3) to (1)
+ 16.7%
0.0%
+ 32.5%
0.0%
+ 19.0%
0.0%
+ 10.3%
0.0%
0.0% + 116.8%
0.0%
－
+ 24.8%
0.0%
+ 23.3%
0.0%
+ 25.5%
0.0%
+ 74.5%
0.0%
- 0.0%
+ 74.3%
Business Plan for
the Medium-term
12
Outline of the Medium-term Plan
Medium-term target （Fiscal Year ending March 31, 2010）
● Consolidate
operating profit: ¥6.3 billion. (Target CAGR 30% from 07.3
to 10.3)
Sales
（¥Billions）
80
60
CAGR: 16%
55.8
（¥Billions）
7
CAGR: 30% 6.3
6
4.8
5
3.6
4 2.92
3
2
1
70.3
62.1
44.7
40
20
0
07.3
Operating profit
0
08.3 09.3 10.3
13
07.3
08.3 09.3 10.3
Summary of the Medium-Term Plan
1. Ensure an appropriate balance among businesses.
Build three business pillars—ASIC, ASSP and Systems—to create a
foothold for sustainable growth.
14%
17%
6%
Sales
Breakdown
23%
Mar. 2007
80%
60%
ASIC
ASSP
Systems
Mar. 2010
2. Expand applications and the customer base to enable sustainable growth.
Invest in development to bolster core technologies and thereby expand
applications and the customer base.
Boost development capabilities and invest in human resources.
Step up strategic partnerships.
3. Explore overseas markets.
4. Provide a positive return to shareholders.
Adopt a performance-linked dividend policy.
Achieve a dividend payout target of 30%.
14
Outline of the Medium-term Plan（R&D）
（¥ Millions）
LSI business
System
business
Total
2006.3
2007.3
2008.3
2008.3
2009.3
20103
Results for
whole year
Results for
whole year
Results for
1H
Forecast for
whole year
Forecast for
whole year
Forecast for
whole year
1,139
1,204
628
1,500
2,100
2,600
160
88
34
200
600
1,200
1,299
1,293
662
1,700
2,700
3,800
15
LSI Business Strategy
ASIC (The revenue base)
● Offer a broad array of our own proprietary technologies and those
of our alliance partners to help differentiate customer equipment.
Concurrently, diversify the products we supply.
ASSP (For future growth)
1. Expand applications and the customer base.
- Build on existing multimedia cellular phone and high resolution digital camera
applications to develop new applications such as compact digital cameras, cellular
phones with digital TV reception features, in-car televisions, and high definition
video equipment.
- Expand the scope of application from high-end to low-end models.
2. Improve the chances of successful market entry through joint
development with customers and alliance partners.
16
Expansion of application areas for ASSP
*1 OFDM: Orthogonal frequency division multiplexing
technology.
High definition
DVD recorder
Image
processing LSI
*2 One segment: single segment dedicated to mobile services
out of the 13 segments in Japan’
Japan’s digital terrestrial broadcasting
format.
High definition
TV for Automobile
installation
13 segment ODFM ( *1)
demodulation LSI with
diversity
Tuner for PC
Digital terrestrial TV
for Automobile installation
Portable DVD player
Cellular Phone
w/digital terrestrial TV
３G cellular phone
Digital Camera
2006.3
LSIs for
“One Seg” (＊2)
One segment OFDM
demodulation LSI
Digital video
and audio
decoder
Application processor
Image processing LSI
2008.3
2007.3
17
ASSP Products Roadmap （DSC）
Pepper
MCP
DSC3-Ｍ
Compact digital
camera
Pepper-X
On mass production
Sample shipping
Eagle
Under development
HighHigh-end digital
camera ～
SingleSingle-lens
reflex digital
camera
Planning stage
DSC3-H
2005.3
2006.3
DSC5
DSC4X
DSC4L
2007.3
18
2008.3
for
ASSP Products Roadmap （Multimedia
mobile devices)
RSOC2A
HighHigh-end
3G cellular
phone
RSOC3
SWAN
2.0
On mass production
Sample shipping
Under development
Cellular phone
w/digital
terrestrial TV
SWAN
Planning stage
Pegasus
R
Pegasus2Z
Pegasus 2
2005.3
2006.3
Pegasus
RZ
2007.3
19
2008.3
Mobile products
w/digital
terrestrial
TV/digital radio
Mobile products
w/digital
terrestrial TV
ASSP Products Roadmap （High definition AV)
Digital terrestrial
broadcasting for
Automobile
installation
Titan
Mercury
2
Mercury
Digital terrestrial
broadcasting
for TV
On mass production
High definition
Sample shipping
Under development
DVD recorder
Apollo
Planning stage
2005.3
Apollo 2
2006.3
2007.3
20
2008.3
LSI Business Plan
Sales
（¥Billions）
（¥Billions）
70
7
58.2
60
50 42.0
40 60
50.0
80
6
53.0
110
4
3.5
4.2
3.17
3
359
420
420
420
2
10
0
5.1
5
162
30
20
Operating profit
1
0
07.3 08.3 09.3 10.3
ASIC
ASSP
21
07.3 08.3 09.3 10.3
Systems Business Strategy
1. Expand the scope of target equipment to keep pace with the trend towards
digital security monitoring solutions. (Launch digital devices and enter the
monitoring camera market.)
2. Enter the market for video monitoring systems for home use in addition to
the constantly growing market of video monitoring systems for business
applications.
3. Adopt overseas production subcontractors to increase diversity and reduce
costs.
4. Expand by turning dedicated imaging systems optimized for major
customers into a “base load” business.
5. Generate sales revenue by providing wireless video intercom system
designed for physical security market.
22
Commercial System Business Expansion
Our products
Security monitoring systems mixed w/digital and analogue
Other company’
company’s products
Analogue camera systems
Monitor
・・・
Monitor
Digital recorder
compatible w/NW
Router
Image
transmission
Software
PC
Covering all aspects of security
monitoring systems.
Expansion into the home security market
in addition to corporate security market.
Fully digital CCTV security monitoring systems
Digital camera systems
Router
Display
controller
Monitor
Router
Router
Software
PC
Hard Disk Recorder
23
Security System
Generate sales revenue by providing wireless video intercom system
designed for physical security market.
Basic Package:
Wireless Video
Intercom System with
security features
Optional Accessories:
A video door station, a wireless
terminal station and a remote monitor
station
Indoor and outdoor wireless cameras
● Seamless Seamless motion-images (15 images per second) by Wi-Fi technology.
● A “location-free” monitor station for viewing who’s at the door or outside.
● Expandable system by the wireless LAN system
● Ease of integrate with a wireless outside camera.
Child’s
Room
Living
Room
Video door
station
Parking
Space
Wireless
terminal
Station
24
Remote terminal
station
The Intercom System Market
and Sales Channels
Scale of the Intercom System market
Units
Million yen
1 ,1 0 0 ,0 0 0
3 5 ,0 0 0
9 0 0 ,0 0 0
3 0 ,0 0 0
7 0 0 ,0 0 0
2 5 ,0 0 0
5 0 0 ,0 0 0
2 0 ,0 0 0
Units sold
2003
2004
2005
Amount of sales
2006
2007
2008
* Source: Fuji Keizai Future Prospect of Security Related Markets 2006
Sales Channels
Electric material
suppliers
Major distributors
Distributors
Distributors
Housing manufacturers
and major reform agents
Trading companies in
the security business, etc.
Home electronics stores
・Stores specializing
in electric work
・Builders
・Housing reform
outlets
・Stores specializing
in antianti-crime
construction work
Ordinary users
MegaChips
Building material
suppliers
Sales channel establishment
Building material
route
Electric material route
Housing manufacturer
and reform company
route
Completed arrangements for 70 designated companies. Plan to
expand the organization to 200 companies and to bolster sales
at each company.
Plans to release new outdoor wireless cameras in November
and at the same time launch a campaign targeting 20,000 stores
affiliated with 2,000 electric material distributors.
Installed demonstration units at 32 showrooms operated by six
major reform companies. Adopted as the standard reform
package by one of the companies.
Home electronics store Certified for introduction by home electronics store
associations in three areas. Plan to begin activities to increase
route
Security and other
routes
merchandise recognition targeting 3,500 affiliated home
electronics stores.
Seeking sales through routes such as security equipment
manufacturers, trading companies, and nursing care equipment
manufacturers.
26
System Business Plan
Operating profit
Sales
（¥Billions）
（¥Billions）
15
2.0
12.1
12
9.1
9
0
1.2
1.0
5.8
6
3
1.5
0.6
0.5
2.68
0
-0.18
0.1
-5
07.3 08.3 09.3 10.3
07.3
27
08.3 09.3 10.3
Key Investment Highlights
To attain the operating income target of 6.3 billion yen for the fiscal year ending
March 31, 2010, MegaChips will expand its target areas and its customer base and
ensure sustainable growth.
● Over the medium term, MegaChips will address the following challenges:
1) Establish three core businesses, 2) Expand applications and the customer base,
3) Cultivate overseas markets and 4) Provide a positive return to shareholders.
LSI Business
● Retain ASICs as a foundation for revenue.
● Build on existing multimedia cellular phone and high resolution digital camera applications to
develop new applications such as compact digital cameras, cellular
cellular phones with digital TV
reception features, inin-car televisions, and high definition video equipment.
Expand the scope of application from highhigh-end to lowlow-end models.
Systems Business
● Expand the scope of target equipment to keep pace with the trend towards digital security
monitoring solutions. (Launch digital devices and enter the monitoring
monitoring camera market.)
Move into the homehome-use market in addition to the steadily growing market for business
business
applications.
● Generate sales revenue by providing wireless video intercom system
system designed for physical
security market.
28
ＩＲ Policy
≫ Purposes of investor relations and basic policy
MegaChips is committed to active investor relations based on transparent, fair and
timely disclosure. Our goal is to receive fair, appropriate share pricing that is
relevant to corporate value and to gain trust and a solid reputation among
shareholders, investors, analysts, and other stakeholders.
≫ Disclosure rules
MegaChips provides information fully in compliance with the regulations of the
Tokyo Stock Exchange on timely disclosure. We also disclose information deemed
necessary or useful to shareholders, investors, and analysts to satisfy their
interests in our company.
≫ Disclosure method
All information defined by the regulations of the Tokyo Stock Exchange is first
reported to the Exchange, and registered with their TDnet (Timely Disclosure
Network) database. We also publish press releases on the information.
29
ＩＲ Policy
≫ Forward-looking statements
The information MegaChips discloses may contain forward-looking statements
that reflect management's current views with regard to certain future events and
financial performance. These statements are based on the current assumptions
and beliefs of the MegaChips Group in light of the data and information currently
available, and actual results may differ materially from those projected or implied
in the statements. Accordingly, we wish to caution readers to refrain from placing
undue reliance on them in making investing and other decisions.
≫ IR “Quiet Period”
MegaChips observes a "Quiet Period" from 10 business days immediately before
the end of each quarter until the announcement of its financial results, in order to
prevent information leaks that may affect stock prices during the preparation of
financial results announcement. During this period, the management refrains from
giving press interviews, participating in meetings, and responding to questions and
inquiries about financial results and forecasts. However, drastic forecast revision
and other crucial information, as defined in the "timely disclosure rules" of the
Tokyo Stock Exchange, shall be readily available during the period.
30
Reference data
31
Digital terrestrial broadcasting system architecture
Tuner Module
RF
OFDM
（Pegasus)
OFDM
RF
（Pegasus)
Tuner Module
RF
OFDM
(Korea)
Application
processor
LSI for
base band
Digital video
and audio
decoder
（SWAN)
Host
CPU
Application
processor
（RSOC3)
LSI for
base band
：MegaChips products
32
Cellular phone
(Japan)
Mobile products
Cellular phone
(Korea)
Digital terrestrial TV solutions
Tuner unit
Software
Current unit size
Next-generation unit size
EPG (electronic program guide)
display
Station search
日本テレビ
字幕ＯＦＦ
４
主１
番組リスト
５月２２日（火）
１ ＮＨＫ総合・東京
09:30－09:55 きょうの料理プラス
09:55－10:00 ニュース・気象情報
＋
10:00－11:54 国会中継
ＮＨＫ総合・東京
字幕１
１
主１
******************************
******************
***************************
Station list display
第１行字幕データ：ＸＸＸＸＸＸＸ チャンネルリスト
第２行字幕データ：
１ ＮＨＫ総合・東京
２ ＮＨＫ教育・東京
第３行字幕データ：最大３行
Subtitle display
４
５
６
７
８
日本テレビ
テレビ朝日
ＴＢＳ
テレビ東京
フジテレビジョン
******************************
******************
***************************
AV decoder LSI for onesegment digital terrestrial
broadcasting
・Audio playback for main
and sub channels
・Reception level display
・Audio condition display, etc.
Tuner module with built-in
OFDM demodulation LSI
for one- segment digital
terrestrial broadcasting
33
Market scale of cellular phone
w/digital terrestrial broadcasting (forecast)
(thousand)
80,000
Japan
70,000
N/America
62,700
EU
60,000
Korea and other
50,000
40,100
40,000
22,900
30,000
20,000
12,100
5,950
10,000
450
0
05
Japan
EU
N／America
Korea and other country
total
Source: chunichisha Co., Ltd.
06
FY05
350
0
0
100
450
07
08
FY06
2,450
1,150
750
1,600
5,950
34
FY07
5,400
1,800
1,400
3,500
12,100
09
FY08
12,000
2,600
2,800
5,500
22,900
2010
FY09
22,000
4,000
5,600
8,500
40,100
FY2010
30,000 (thousand)
8,000
11,200
13,500
62,700
Our targets and its market scale for ASSP
Worldwide
Target
FY2006
（million）
② Cellular phone
③ Automobile
installation
④ High definition
AV
FY2008
（million）
FY2006
（million）
FY2008
（million）
5.3
6.5
0.7
0.8
Compact digital
camera
73.7
82.0
8.7
8.5
High quality
camera for
cellular phone
40.0
180.0
20.0
38.0
Terrestrial digital
broadcasting
5.5
22.0
2.5
12.0
Car navigation
system
11.0
20.0
4.0
5.0
HiHi-Definition TV
52.0
100.0
4.5
8.0
0.3
4.0
0.2
3.0
Digital SLR
① DSC
Domestic
HD DVD
BlueRay
Source： ① CIPA, ②～④ chunichisha Co., Ltd.
35
Our targets and its market scale for System business
Domestic
Target
Security
monitoring
system
Source
FY2006
（thousand
）
FY2008
（thousand
）
Security monitoring
camera
883
1,052
FY06 FUJI KEIZAI CO.,LTD.
Image recording
system
120
130
FY06 FUJI KEIZAI CO.,LTD.
15
16
FY06 FUJI KEIZAI CO.,LTD.
Image transmission
system
36
Inquiries to:
PR, Corporate planning,
MegaChips Corporation
[email protected]
4-1-6, Miyahara, Yodogawa-ku, Osaka 532-0003
TEL： 06‐6399‐2884 FAX： 06‐6399‐2886
37