The non-volatile memory chip producer is hoping to re-launch its cancelled ADR offering in either March or April and plans to increase the number of units on offer to make sure that it raises its originally intended issue size. Consequently, what had initially been envisaged as a 25 million unit transaction (where one unit equals 10 shares), is to be expanded to at least 40 million units and potentially 50 million.
At its current NT$50.5 ($1.55) share price (Friday's close), this would potentially raise the company $635 million to $793.75 million.
Deutsche Bank and Merrill Lynch remain lead managers of the deal, which was first filed in mid-September, but never launched after Macronix watched its stock price slide from a high of NT$100 in June to a low of NT$34.6 in mid-October. Since then, its price has peaked once more in mid-November at the NT$60 mark, then fallen away to the high NT$30 mark in late December, before rising in tandem with the entire Taiwanese market since the beginning of the year.
At the time of the deal's official cancellation in November, company officials said that the decision was based on foreign investors' deteriorating view of Taiwan's political and economic situation, which in turn led the Taipei Weighted Index to close the year 39.61% down, the world's ninth worst performing index.
One of the reasons why Macronix is said to have decided to revive the deal again is because its share price is now back to where it was when the deal was filed in September and it has long been keen to increase ADR liquidity. However, the main reason lies in its determination to plough ahead with the construction of a third Fab, scheduled to be completed by the end of the third quarter.
The company is further said to be intent on increasing R&D spending to 10% of revenue, so that it can enhance its position in the emerging system-on-chip market and continue to maintain an edge in the production of multimedia ROM (Read Only Memory) chips and mask ROM. Both are key to its relationship with Nintendo, whose two new products for 2001 - Gameboy Advance and Game Cube - both source Macronix chips and are the main reason why the third Fab is being constructed.
In its most recently released figures for November 2000, The Semiconductor Industry Association (SIA) reported that chip sales were up 28% on the year before, with the flash memory chip sector (for mobile phones and personal digital assistants), which Macronix also specializes in, registering particularly strong growth.
However, not all analysts agree. "We think Macronix's share price may have peaked a bit and have recently moved from a strong buy to a hold position." says one specialist. "Long-term, we are positive about the flash market since consumer products is one of only a few sectors still registering strong growth. But we believe that the near-term fundamentals of the flash sector are deteriorating and that there is weakness building up in the handset market on the back of oversupply."
"Macronix may benefit from increased chip purchases from Nintendo," he adds, "but it won't be able to completely escape the negative trend."
Via selects underwriters
Meanwhile, Via Technologies, the world's second largest chipset manufacturer behind Intel Corp, is in the final stages of choosing between three US investment banks to lead its debut ADR.
The company is hoping to raise about $300 million from a Nasdaq offering later in the third quarter, having pushed back plans for a year because of its purchase of the PC graphic chip assets of S3 in the US. Since it's domestic listing in March 1999, the company has grown rapidly to become one of Taiwan's top 20 by market capitalization and hopes that an ADR will enhance its standing among international equity investors. It has also said it wants a US listing to put a stock options scheme in place for its American subsidiary companies.
Analysts say that despite a slowdown in PC growth, Via will perform well because it continues to eat up market share. As SG Securities analyst Eric Chen explains: "At the beginning of 1999, Via had a 25% share of the global chipset market. In 2000, it grew to 42% and this year, we believe that it will stand equal to Intel on 45%."
And he adds: "We've had good feedback from Taiwan's motherboard manufacturers about Via's KT133 chipset which was released in the fourth quarter, and also its KT266 chipset, which comes online during the second half and uses DDR (Double Data Rate) technology."
In terms of the CPU sector - where Intel has traditionally dominated - Via is aggressively planning to expand its current 7% to 10% market share. In particular, it has said it will push its Cyrix III CPU at Taiwanese and, increasingly, Mainland clients.
As a result of its phenomenal growth, Via hac come to command a much higher price/earnings multiple than the12 times 2001 sector average in Taiwan. The company is currently trading on a P/E multiple of 19 times 2001 earnings, down, however, from a 23 times historic average.
Having listed at NT$120 per share, the company stood at NT$274 (Friday's close), up 50.55% year to date.
