VIA Technologies selects ADR underwriter

The world''s second largest chipset manufacturer after Intel Corp is moving ahead with its Nasdaq offering.

Credit Suisse First Boston has been selected to lead what is expected to be a $300 million to $500 million third quarter ADR offering.

Because of VIA's status as the "poster child" of the Taiwanese tech sector, competition to win the mandate has been intense, with Taipei-based bankers reporting that Goldman Sachs came closest to snagging the mandate off its Swiss-American rival.

VIA has enjoyed a spectacular rise to fame in Taiwan since its domestic listing in March 1999 at NT$120 per share. Having taken on Intel's dominance of the chipset market, the company has seen its global market share rise from 16% in 1999 to 29% in 2000. Initially, many analysts had predicted that the company would equal Intel's 45% market share during 2001, although a number have now revised their forecasts, following uncertainty about the introduction of the Pentium IV processor and the next generation of chipsets that will support it.

These concerns, in tandem with slowing sales during the traditionally slow second quarter, have led VIA's share price to fall about 29% from its year-to-date peak in March. However, the stock has still vastly outperformed the Taipei Weighted Index, closing Wednesday at NT$253, a 39.01% rise year-to-date versus a 6.878% rise for the overall index.  Over a 12 month period, the company peaked at NT$466 in May 2000, falling to a low of NT$165 in December and is currently trading on a p/e ratio of about 19 times 2001 earnings.

Having grown to become one of the country's top 20 companies by market capitalization, VIA is, nevertheless, still a minnow compared to TSMC and has a market capitalization of about $5.2 billion against TSMC's $32.8 billion and Intel's $201 billion. 

However, as CSFB stated in it a recent research report, "VIA , in our view, is not your average company."

Its vision, willingness and ability to take on a market giant like Intel has in large measure been attributed to its small size, which has afforded it greater flexibility and nimbleness. Yet for most analysts now, the key question is when or how VIA will get a license to manufacture the next generation of chipsets for the Pentium IV.

"We think it's highly likely that Intel will re-gain market share this year," says one Taipei-based analyst. "They have a head start with their own chipset for the Pentium IV, while VIA is still arguing over the terms of its licensing agreement because it wants to secure a pricing discount from the company.

"VIA has been ahead of its domestic competitors in developing the next generation of chipsets," the analyst adds, "but no-one knows how close it is to completing a sample that can be sent to the Taiwanese motherboard manufacturers. If it is ready to ship a sample, then it’s going to have to bite the bullet and sign."  

VIA originally decided to seek a US listing about a year ago, but put the plans on hold after it acquired the PC graphic chip assets of S3 in the US. Yet the company remains keen to enhance its visibility with international equity investors and also put a stock options scheme in place for its American subsidiaries.