Fabless Chipmaker MaxLinear Prepares for Next Week’s Modest IPO
Little did I know when I canceled an interview in September with MaxLinear CEO Kishore Seendripu that my journalistic window of opportunity would irrevocably close—and it probably won’t crack open again until some Grizzly Adams wins the jackpot in this year’s Nenana River Ice Classic.
Needless to say, MaxLinear deflected my subsequent attempts to reschedule the interview. MaxLinear’s quiet period deep freeze officially began two months later, when the Carlsbad, CA-based wireless chip design company filed its registration statement for an initial public offering. Now, if the IPO experts at Renaissance Capital are right, we can look forward to MaxLinear’s public offering sometime next week.
MaxLinear, founded by eight semiconductor industry veterans in 2003, has planned a relatively modest offering of more than 5.4 million shares (6.25 million if the underwriters exercise their full over-allotments). At a price of $12 a share, the company expects to raise $42.7 million (or nearly $50 million if all over-allotments are sold) by selling its part of the offering—almost 77 percent. The remaining 1.27 million shares are being sold by inside stockholders. MaxLinear plans to use the capital for general corporate purposes and acquisitions. The company’s shares will trade on the New York Stock Exchange under the ticker symbol MXL.
The timing seems ideal for a newcomer that specializes in computer chips that enable people to watch TV on a handheld wireless device. MaxLinear designs high-performance radio frequency (RF) systems-on-a-chip for receiving and processing digital TV broadcasts, digital videos, and broadband data downloads. Television nowadays is increasingly being incorporated in consumer electronic devices that previously did not include TV functionality, such as mobile handsets, PCs, and netbooks. As the company says in its registration document, “Recent technological advances in the display and broadcast TV markets are driving dramatic changes in the way consumers access and experience multimedia content.”
Of MaxLinear’s 177 employees, more than 77 percent are in R&D, designing RF and mixed-signal chips used in cable TV set top boxes, digital televisions, mobile handsets, personal computers, netbooks, and in-vehicle display systems. “We believe that several favorable trends, across multiple target markets, are contributing to the increase in revenue opportunity for providers of RF receivers and RF receiver SoCs [systems on chips],” the company says.
As a fabless semiconductor company, MaxLinear uses third-party contractors in Asia for manufacturing and assembly. All of its chips are made by United Microelectronics Corporation, or UMC, at foundries in Taiwan and Singapore.
MaxLinear says it generated roughly $51.3 million in revenue in 2009, and 99 percent of its sales were in Asia. Before 2009, most of MaxLinear’s revenue came from sales of its mobile handset digital television receivers in Japan, with the balance generated by global sales of its digital television RF receiver chips. Its biggest customers are Panasonic (23 percent), Murata (13 percent), and MTC (12 percent).
Last year, the company sold more chips for use in digital set top boxes (made in Asia and sold in Europe) and in automotive navigation displays and digital TVs. MaxLinear says its future revenue growth will depend on the company’s ability to expand—particularly in markets for cable set top boxes, automotive entertainment, Internet Protocol TV, and personal computer TVs. Competitors include a variety of large and small semiconductor companies, including Analog Devices, Broadcom, Entropic Communications, Silicon Laboratories, and Xceive.
The company says its success also depends on the continued services of Seendripu, MaxLinear’s chairman and CEO, Curtis Ling, the chief technical officer, and Madhukar Reddy, vice president for IC and RF Systems Engineering.
As a final note, I’m told that the “quiet period” for an IPO ends when the underwriters’ over-allotment option has been exercised, closed, or expires unexercised. It depends on the language of the company’s agreement with its underwriters, but the option usually can be exercised for 30 days after the IPO. I’m guessing the ice on Alaska’s Nenana River won’t break until April 27—and maybe MaxLinear will talk with me sometime in May.