Emerging Markets : China’s Chip Designers Fall Flat

 

DR NEWS

 

China-based computer chip designers for MP3 music players and digital cameras failed to wow investors in their recent Nasdaq debuts. Unlike last summer’s initial public offering of Baidu, known as “China’s Google,” which rose 354% in its first day of trading, the IPOs of Actions Semiconductor and Vimicro International received a chilly reception from investors, despite the companies’ Chinese origins.

American depositary receipts of Vimicro, which sells its chip designs for digital cameras to consumer electronics manufacturers, fell 11% in their opening day on Nasdaq after being priced below the expected range by underwriter Morgan Stanley. Investors apparently were worried about accounting problems and the company’s ability to compete as it moves into the highly competitive global business of making multimedia chips for mobile phones.

Actions Semiconductor, which develops chips for portable music and video players, reduced the size of its offering of American depositary shares and cut the price at which shares debuted on the exchange. The company had already postponed the IPO. Actions Semiconductor went public at $8 a share and closed at the same price in its debut, with Credit Suisse First Boston as lead underwriter. Actions Semiconductor faces a patent-infringement case by US competitor Sigmatel on its chip designs and could be banned from the US market, depending on the outcome of the litigation.

 

 

Gordon Platt


 

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