Analog and mixed-signal fabless chip company Montage Technology Group Ltd. has filed to make an initial public offering of shares and list on the Nasdaq market.
The company, founded in 2004 and headquartered in Shanghai, is a quiet success that now looks set to reap the benefit of nearly a decade of building a business selling analog and radio chips, DSPs, and interface transceivers to Chinese makers of home entertainment consumer electronics. Although the company usually only uses a single foundry for a given chip, in 2012, according to its S-1 filing, it spread its work among three foundry suppliers: SMIC, Fujitsu, and UMC.
Montage, which received backing from Intel Capital in 2006 and 2008, has registered to sell 7.1 million shares at between $12 and $14 per share. At the mid-point this would be a $92 million IPO and give the company a market capitalization of about $345 million. The company said it would retain about $70 million of the $92 million raised.
The company has particularly addressed satellite and cable set-top boxes with ICs aimed at boosting weak, distorted, or out-of-specification broadcast signals, which it claims is a problem in emerging markets. More recently the company has made moves into cloud computing with low-power, high-speed memory interface ICs. Since the company's formation, it has sold 230 million ICs, and its sales revenues have grown strongly in recent years, taking the company into profit.
In 2011 the company made net profit of $5.0 million on revenues of $50.3 million, and in 2012 the company made a net profit of $18.3 million on revenues of $78.2 million. However, Montage admits in the form that 2011 was its first profitable year, and it has an accumulated deficit of about $15 million.
Although the company's analog and mixed-signal technology is broadly applicable, Montage has been selective about the opportunities it has pursued. Montage claims its customers include nine out of the ten largest set-top box manufacturers in China in 2012. The company also claims to be one of two suppliers of DDR3 interface technology approved by Intel for use in servers. It supplies interface ICs to DRAM manufacturers for use in memory modules supplied for use in servers.
The company's senior executives include co-founders Howard Yang, chairman and CEO; and Stephen Tai, president. Prior to co-founding Montage Yang was a vice president at IDT. Yang had previously worked in Silicon Valley at National Semiconductor, Chips and Technology, and Pericom Semiconductor. Tai was member of the core founding team at Marvell Technology Group Ltd. from 1995 to 2003.