SAN FRANSCIO — Comms IC vendor Aquantia's stock rose nearly 6 percent on the long-awaited day of its initial public offering, the latest in a string of resurgence for IPOs in the semiconductor sector.
Aquantia's stock closed at $9.51 on its first day of trading Nov. 3, after opening at $9. Faraj Aalaei, Aquantia's chairman, president and CEO, said the company views the IPO as a great success, though he added that it was early. "You really can't judge an IPO by what happens on the first day, he told EE Times in an interview.
The path to an IPO, once considered the ideal end game for semiconductor startups, has been much difficult to navigate in the semiconductor industry in recent years, as stock markets and investors have generally been drawn to software firms that are less capital intensive and can offer a faster and larger return on investment.
However, startup activity has picked up in the semiconductor space. According to a Price Waterhouse Coopers (PWC) report, there were eight semiconductor IPOs in the second quarter of 2010, the most of any quarter since 2010. Of these eight chips IPOs, five were Chinese firms, according to the report.
Aquantia, which derives the bulk of its revenue from major customers Intel and Cisco Systems, has long been considered a promising candidate for IPO. Rumors of the company's impending IPO have been circulating for years.
Aalaei told EE Times that Aquantia believed the timing was right to test the waters this year, at a time when the company has good visibility into its future prospects and has been growing at a rate of 18 percent year-over-year for the past two quarters. He added that the timing of the IPO was also boosted by the strength of the semiconductor market, which is on pace for record sales of nearly $400 billion.
Aquantia was founded in 2004 to focus on Gigabit Ethernet and then Mult-Gig Ethernet connectivity. Aquantia has been at the forefront of many new technologies, including 10GBASE-T and NBASE-T.
"This company has been really adept at seeing around the corner, developing unique technologies and bringing them to market," Aalalei said.
Phil Delansay, Aquantia's founder and the original CEO, now senior vice president of business development (left), with current CEO Faraj Aalaei.
Aalalei said Aquantia's IPO got a warm reception among investors, despite the rap of the semiconductor industry as capital intensive. Investors, he said "realize that these are hard, tangible markets and the opportunity is really there to grow."
Aalalei also said that a wave of unprecedented consolidation in the semiconductor industry over the past few years also streamlined the market to allow promising startups with good growth prospects to stand apart from the crowd.
"The competitive landscape is now consolidated," he said. "It used to be back in the day you used to come out in a sector and there would be 17 other startups in that area. That doesn't happen anymore."
— Dylan McGrath is the editor-in-chief of EE Times.