Embedded microprocessor intellectual property (IP) supplier Andes Technology Corp (晶心科技), a subsidiary of leading Taiwanese integrated circuit designer MediaTek Inc (聯發科), saw its shares soar on the company’s Taiwan Stock Exchange debut yesterday.
Buying was fueled by hopes that MediaTek would place more orders with the subsidiary, boosting its sales, while many investors have been attracted by the high profit margin enjoyed by the supplier, dealers said.
Andes shares rose 191.09 to close at NT$189.5 on the Taiwan Stock Exchange, whie the TAIEX ended up 0.48 at 9,744.21.
Shares soared about 107 percent from their issue price of NT$65.1 soon after the main board opened and continued to rise until the close of trading.
“Many investors chased Andes shares because of its rich parent — MediaTek — in the hope that Taiwan’s largest IC designer will continue to patronize its subsidiary,” Hua Nan Securities Co (華南永昌證券) analyst Kevin Su (蘇俊宏) said.
MediaTek chairman Tsai Ming-kai (蔡明介) is also chairman of Andes.
Apart from intellectual property 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.
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 US, with more than 165 sales contracts.
Andes said in its main board listing prospectus that it generated 66.37 percent of its sales in the domestic market and the remainder overseas.
The company is the fifth-largest intellectual property supplier in the world after ARM, Synopsys, Imagination and Cadence.
“Strong interest in Andes shares 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 shares,” Su said.
Andes said its gross margin is more than 98 percent.
Andes shares were previously traded on the emerging market from Aug. 6, 2015.
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