Chipmaker Wolfson Micro misses out on early 4G demand

By Paul Sandle

LONDON, Feb 5 (Reuters) - British microchip maker Wolfson Microelectronics swung to an underlying loss in the final quarter of 2013 after it struggled against Qualcomm (TLO: QC-U.TI - news) 's dominance in 4G mobile phone technology.

The Edinburgh-based company that specialises in audio technology is a supplier for the 3G version of Samsung's Galaxy S4 smartphone but its chips were not in the 4G model of the top-selling handset.

Chief Executive Mike Hickey said the company paid the price for a "faster than anticipated transition from 3G to 4G smartphones that benefited a competitor".

He acknowledged that Qualcomm is the dominant provider of processing technology for first-generation 4G phones, but expects Wolfson to catch up as more platforms compatible with its chip technology enter the market.

"There are a lot of other silicon providers, such as Samsung LSI (Berlin: LOG.BE - news) , Broadcom (NasdaqGS: BRCM - news) , Intel (Berlin: INL.BE - news) and Nvidia (Frankfurt: NVD.F - news) , all bringing to market alternative LTE (4G) platforms, and we are the natural choice for our customers with those platforms," Hickey said.

Wolfson posted an underlying operating loss of $4.5 million for the final quarter of 2013, against a profit of $1.5 million for the same period a year earlier, on revenue that dipped to $42 million from $56.1 million.

Hickey said he expects the company to resume its growth trajectory in the second half of 2014 as customers, including Chinese smartphone makers, launch new products using Wolfson's technology and as new LTE platforms come to market.

Shares in Wolfson fell to a two-year low of 109 pence after the results, which analysts said were slightly worse than expected. They were trading down 9 percent at 120 pence by 1147 GMT.

The outlook for first-quarter revenue of between $28 million and $36 million was also below consensus, which stood at $36.8 million, Citi analysts said.