MediaTek, the world's largest supplier of semiconductors for DVD players, said second-quarter profit rose 27 percent because the SARS outbreak hindered rivals' efforts to compete for customers in China.
Net income for the three months ended June 30 increased to NT$3.3 billion ($96 million) from NT$2.6 billion a year earlier. Sales, which Taiwanese companies are required to report monthly, increased to NT$8 billion from NT$6.8 billion.
MediaTek last year became the first company to sell a chip that combines the functions of several into one. Competitors that planned to offer similar products to DVD-player makers in China were forced to cancel visits to the nation after the mid-March outbreak of severe acute respiratory syndrome, MediaTek said.
``Because of SARS, some design activity in China slowed,'' MediaTek Chairman M.K. Tsai said on a conference call. Rivals won't be able to catch up this year because ``the time is almost over for design-in efforts for the fourth quarter,'' he said.
Second-quarter profit was better than the median estimate of NT$2.9 billion of five analysts surveyed by Bloomberg. MediaTek shares rose NT$7, or 1.7 percent, to NT$427 before the earnings announcement. They have gained 63 percent since the end of March.
MediaTek on April 18 said profit this year may rise 2.5 percent to NT$12.5 billion on sales of NT$32.4 billion.
The forecast implies profit growth may slow as more rivals, such as Taiwan's Via Technologies Inc. and Sunplus Technology Co., enter the business. MediaTek's 2002 net income rose more than 80 percent to NT$12.2 billion from NT$6.7 billion in 2001.
MediaTek is counting on the introduction of new chips for mobile phones and recordable DVD players later this year to help lift profit.
Via has sued Mediatek over allegations that it violated patents involving DVD chips. MediaTek said on June 13 it may pay up to $90 million to next-largest rival ESS Technology Inc. of the U.S. to end a patent suit. The payment won't hurt profit because the company has set aside money for compensation, analysts said.