Shares in MediaTek unit soar on main board debut

Taipei--Shares in Andes Technology Corp. (???), an embedded microprocessor intellectual property supplier and a subsidiary of leading Taiwanese integrated circuit designer MediaTek Inc., jumped on the company's first day on the Taiwan Stock Exchange.

Strong buying was sparked by high hopes that MediaTek will place more orders with the subsidiary boosting its sales, while many investors have been attracted by the high profit margin enjoyed by the microprocessor IP supplier, dealers said.

Shares in Andes rose 191.09 percent to close at NT$189.50 (US$6.13) on the TWSE, where the weighted index ended up 0.48 percent at 9,744.21.

The stock soared about 107 percent from its issue price of NT$65.1 soon after the local main board opened and that strength continued until the end of trading.

"Many investors rushed to chase the stock since Andes has a rich parent -- MediaTek -- hoping that the largest IC design house in Taiwan will continue to patronize its subsidiary," Hua Nan Securities analyst Kevin Su said. MediaTek Chairman Tsai Ming-kai (???) also serves as chairman of Andes.

Apart from IP used in communications chips, smartphone touch chips and storage chips, Andes said it also supplies products for the Internet of Things, automotive electronics and Internet equipment.

According to Andes, eight of the top 15 IC designers in Taiwan are its customers with MediaTek being the largest, while three of the 10 leading IC design houses in South Korea are also placing orders.

In addition, Andes said it has secured orders from IC designers owned by large telecom operators and home appliance firms in Japan and from Internet equipment suppliers in the United States, with more than 165 sales contracts.

In the company's prospectus for the main board listing, Andes said it generated 66.37 percent of its sales in the Taiwan market and the remainder overseas.

Currently, Andes is the fifth largest IP supplier in the world after ARM, Synopsys, Imagination and Cadence. "The strong interest in Andes shares today also reflects its high profit margin since an IP supplier has no need for production but receives royalties on products it provides. I think the listing will prompt institutional investors to follow the stock," Su said.

Andes said the company's gross margin currently stands at more than 98 percent.

Before listing on the main board on Tuesday, Andes shares traded on the emerging market from Aug. 6, 2015, in preparation for a listing on the main board.

Source: Focus Taiwan News Channel