Omnivision Quarterly Earnings Call Transcript

Seeking Alpha finally published Omnivision's Q3 fiscal 2010 earnings call transcript. Some interesting quotes:

Shaw Hong, CEO:

"OmniBSI-2 delivers the world’s first 1.1-micron back side illumination pixel and is the first OmniVision pixel built on a 300-mm copper castings.
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OmniBSI-2 technology is not limited to only smaller pixel designs, in fact, it can also be applied to larger pixel designs to achieve performance advantages and exceed both current BSI and FSI image sensors of similar size.
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Today, our customers use [CameraCube] predominantly for the secondary camera application [ph] in mobile handsets, however, going forward, we anticipate that CameraCube devices will be used as the primary camera in mobile handsets."

Bruce Weyer, VP Marketing:

"Actual performance measurement of OmniBSI-2 product demonstrated improvement from the 20% to 75% across key quality metrics for similar size first-generation BSI pixels including quantum efficiency cross talk and alignment to the metrics.

By comparison, the new 1.1-micron OmniBSI-2 pixel not only outperforms the current 1.75-micron FSI architecture, but also equals the performance of the industry leading 1.4-micron BSI pixel that is currently in mass production.
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our market leadership in the video centered notebook webcam, automotive, and security markets where we hold over 60%, 50% and 50% respective market shares as measured by industry analysts technosystems research."

Anson Chan, CFO:

"R&D expenses in the third quarter totalled $20.4 million, representing an 8% increase from the $18.9 million we recorded by our second fiscal quarter. The primary reason for the increase was our release of additional mass designs to TSMC, which increased our NRE costs, and NRE cost is a key component of our total R&D expenses."

Yair Reiner – Oppenheimer:

"...question on the ramp up of BSI, as that takes place next year, what are you anticipating in terms of gross margin head wins kind of when you initially try to improve yields and once you are through those initial issues, do you expect BSI parts to carry a higher gross margin than you are having at your traditional products?"

Anson Chan:

"Upon initial production, you will have some unfavorable yields and it takes us typically about six months to resolve those issues before it starts to produce reasonable profit..."

Yair Reiner – Oppenheimer:

"Okay, so in other words extrapolate that gross margins are unlikely to expand until the ramps are fully behind us?"

Anson Chan:

"We definitely not believe there would be any unusual effects on our gross margin for our fourth fiscal quarter 2010."

Yair Reiner – Oppenheimer:

"Can you comment on whether a BSI chip relative to kind of a more traditional chip with the same resolution would carry a higher or an equivalent ASP?"

Bruce Weyer:

"The BSI technology has a lot of premiums for the market relative to the value it brings. It brings a lot better image quality and therefore actually gets us into a bit of a different class of designing products as well. So in that respect, yes, it typically would carry a higher average selling price. The technology also has more advanced process technology involved with it, so it also carries a little bit higher cost basis as well. So, that is where Anson was alluding towards the fact that in the long term you do not anticipate a broad differentiation relative to normal earnings curves."