COMPANIES TO WATCH

Leader: Feng Jun

Products: Aigo line of MP3 and MP4 players, LCD monitors, digital cameras, USB thumb drives

Why it's hot: Started in PC cases but has leveraged the popularity of Aigo MP3 players to boost its brand awareness in China. Opening up overseas offices as it looks to build its global footprint.

Key challenge: Building its brand globally while guarding its home turf against withering competition.

Vimicro International Corp.
(www.vimicro.com)

Leaders: John Deng, Tom Zhang

Products: PC camera image processors; handset multimedia processors

Why it's hot: One of China's leading fabless design houses, and the first one to IPO on the Nasdaq. Quickly ramping up staff to more than 400. Looking to mergers and acquisitions to build up expertise in consumer electronics.

Key challenge: Holding its own in the multimedia sector, where it faces top-flight competition.

CEC Wireless
(www.cecwireless.com.cn)

Leader: Howard Wu

Products: Cell phone designs for Nokia, Motorola, Chinese brands

Why it's hot: One of China's first mobile phone design houses. Close relationships with second- and third-tier European operators. Savvy approach to R&D. Has shipped more than 30 million phones.

Key challenge: China has more than 50 handset design houses.

Huawei Technologies Co.
(www.huawei.com)

Leader: Ren Zhengfei

Products: Telecom infrastructure, handsets

Why it's hot: China's first large-scale telecom gear maker faces stiff competition but has aggressively expanded by serving second-tier, emerging markets. It's also slowly gaining the confidence of European operators.

Key challenge: Pushing into developed markets, where it will clash with the likes of Cisco.

ttiam Systems Ltd.
(www.ittiam.com)

Leader: Srini Rajam

Products: DSP-based intellectual property in consumer multimedia and broadband communication applications

Why it's hot: Chasing a $1 billion to $2 billion market and providing up to 18-month time-to-market advantage for OEMs making products using Ittiam solutions. Management has experience and breadth.

Key challenge: Coping with shortage of experienced talent, slotting solutions into shortened product life cycles.

Tejas Networks India Ltd.
(www.tejasnetworks.com)

Leader: Sanjay Nayak

Products: Optical networking, such as next- generation Sonet/SDH

Why it's hot: Deployed in most Tier 1 networks globally, and in almost all of India's fast-growing networks. Has OEM contracts with top-tier global equipment companies. Boasts support from Gururaj Desphande, chairman of Sycamore Networks.

Key challenge: Managing its product line through the global transition from TDM- to Internet Protocol-based add/drop multiplexing. Leveraging proprietary intellectual property to keep costs low.

ACCESS Co. Ltd.
(www.access.co.jp)

Leader: Toru Arakawa

Products: Browser software; new entrant into the operating-system business

Why it's hot: Taking advantage of overwhelming share in Japan, Access is expanding its business outside of its home country, actively involving overseas companies through mergers and alliances.

Key challenge: With established suppliers such as Symbian and Microsoft already dominating the market for mobile-phone operating systems, picking up market share could prove to be a rough road.

IPFlex Inc.
(www.ipflex.com)

Leader: Kazuyuki Sato

Products: Dynamic reconfigurable processors

Why it's hot: Processors that can perform multiple functions at high speed have potential in products from digital consumer devices to purely high-performance computer systems.

Key challenge: Expanding the application areas in which reconfigurable processors can be used.

BenQ Corp.
(www.benq.com)

Leader: K.Y. Lee

Products: Cell phones, MP3 players, LCD TVs, PC peripherals

Why it's hot: Recent takeover of Siemens handset business gives BenQ a popular product on which to build brand recognition.

Key challenge: Stanching the losses in the handset division and gaining traction for new models of BenQ-Siemens branded handsets. Also needs to maintain a long-term commitment to big marketing budgets.

on Hai Precision Industry Co.
(www.foxconn.com)

Leader: Terry Gou

Products: Computing, consumer, comms

Why it's hot: EMS provider Hon Hai is into just about everything--from Apple iPods and Motorola cell phones to Sony's Playstation 2, wireless LANs and PC motherboards. In the cutthroat EMS business, its good margins are a bonus, and its willingness to execute M&A deals has helped push it through the $20 billion mark.

Key challenge: Driving volume and taking on more design work to maintain margins.

High Tech Computer
(www.htc.com.tw)

Leader: Peter Cho

Products: PDAs, smart phones

Why it's hot: Early partnership with Microsoft gave it a leading position in its product markets. Designs for Hewlett-Packard, Dopod and O2, among others. Recent move into clamshell designs is positive.

Key challenge: Managing expectations. Stock has doubled since December, but word is that Microsoft is looking to empower HTC's competitors, too.

MediaTek Inc.
(www.mtk.com.tw)

Leader: M.K. Tsai

Products: Optical-disk chips, cell phone chips, digital TV (demodular, decoder, image processing)

Why it's hot: Once a follower, MediaTek is able to hold its own against foreign competitors in the DVD market, making it Taiwan's only billion-dollar fabless design house. Smart moves into handset ICs, which include forthcoming integration of Bluetooth and Wi-Fi into its baseband IC, have won market share in Asia, and the company is pursuing the digital-TV market as well. Both will drive sales in 2006 and 2007.

Key challenge: Breaking into top-tier TV and handset products.

Core Logic Co. Ltd.
(www.corelogic.co.kr)

Leader: Hwang Ki-Soo

Products: Mobile multimedia SoCs: camera application processors, multimedia application processors and image signal processors

Why it's hot: Core Logic is Korea's leading developer of camera application processors, multimedia application processors and image signal processors for cell phones. Company forecasts a 70 percent share of the MAP market in China. Also a leading provider of video applications for Samsung Electronics, LG Electronics and Konka.

Key challenge: Following up its MPEG-4 solution with its H.264-based Diva line, which targets mobile television. Look for Diva during the second half of the year.

Integrant Technologies Inc.
(www.integrant.com)

Leader: Brian Ko

Products: Tuner RFIC, CDMA RFIC

Why it's hot: Integrant is a strong player in the market for low-power RF tuner chips used in mobile-TV terminals, and it has scored design wins with Korea's leading T-DMB phone makers, such as Samsung Electronics, LG Electronics and SK Teletech.

Key challenge: Integrant is looking to modularize its chip solutions for mobile-TV terminals. The goal is to leverage its IP across various platforms to support almost all mobile-broadcasting specs, such as satellite-DMB, terrestrial-DMB, DVB-H, ISDB-T and DAB, as well as the CDMA-based solution.

SOURCE: EE Times research