Wolfson gets solid return from digital revolution

Surging demand for digital gadgets such as DVDs, MP3 music players and a plethora of handheld communication devices helped Wolfson Microelectronics, the newly floated chip maker, deliver impressive maiden results.

The company, which floated last October, reported turnover of $75.7m for 2003, an increase of 125 per cent, and pre-tax profits of $12.5m. The company, although based in the UK, reports its results in dollars because trade in semiconductors is always undertaken in the currency and most of its customers deal in dollars.

Notably, the company announced that it had been cash generative during the year, producing $4.8m of cash while research and development spending continued to grow, rising to $9.4m from $4.9m in 2002.

The company makes high- performance circuits using mixed-signal semiconductors. These provide a way of converting data backwards and forwards between analogue and digital formats.

David Milne, the chief executive, said: "There are three main reasons behind our growth. The first is the booming consumer market for things like digital cameras and DVDs as well as the continued growth in mobile phones. The second reason is our success in broadening our customer base, and we've opened up offices in China, Korea and Taiwan.

"Thirdly, we're continuing to increase the number of our new products. We brought out about 15 last year and these don't necessarily replace older products but add to the portfolio and importantly that adds to our stability as a company."

Wolfson said that over the past three years the digital consumer sector had significantly outperformed the overall semiconductor market, which has been in a well-publicised slough since the technology bubble burst in 2001. Much of the company's growth has been fuelled by households converting their electronic equipment to digital.

Mr Milne said that while there might be a danger of this conversion effect eventually running out of steam, he was confident there was still ample long-term growth for the company. He pointed to the anticipated take up of mobile phones in China as an example of future demand. Only 17 per cent of Chinese consumers had mobile phones, he said, but even at that level there were still more mobiles in use in China today than there were in the US.