Comms chips

Inphi Files for an IPO

Analog semiconductor company Inphi Corp. thinks it's ready to go public, partly on the promise of the 100-Gbit/s market.

Inphi filed its S-1 form with the Securities and Exchange Commission (SEC) today, listing a maximum offering price of $115 million.

It's part of a small spate of optical-related IPOs lately. NeoPhotonics Corp. (NYSE: NPTN) has its own S-1 on the books, and O-Net Communications (ShenZhen) Ltd. recently went public in Hong Kong. (See NeoPhotonics Readies Its IPO and Optical Firm Preps Hong Kong IPO.)

Inphi counts itself in the optical space, too. Founded in late 2000, the company originally targeted its indium phosphide (InP) chips at 40-Gbit/s networks.

But it had to retrench after the crash. Most of its revenues now come from memory-interface chips, with Samsung Electronics Co. Ltd. (Korea: SEC) and Micron Technology Inc. (Nasdaq: MU) representing 36 and 17 percent of revenues last year, respectively. Samsung even owns 6.9 percent of the company.

Revenues have been flat since 2007, but Inphi became profitable in 2009, with net income of $7.3 million on revenues of $59.9 million.

Table 1: Inphi's Earnings
2005 2006 2007 2008 2009
Revenues ($M)
Net Income (loss) ($M)
Source: Inphi S-1

For its first quarter of 2010, which ended March 31, Inphi reported net income of $12 million on revenues of $19.1 million.

In the 40- and 100-Gbit/s markets, Inphi sells chips that get tucked away in optical interface modules or on linecards: transimpedence amplifiers, modulator drivers, clock-and-data recovery chips, and serializer/deserializers (better known as SerDes). (See Inphi Celebrates Life After 40-Gig.)

The company still spends quite a lot on research and development. R&D spending has stayed at just less than $18 million for each of the past three years, even as revenues have grown. That still represents about 30 percent of revenues.

Inphi's sales to Korea have been substantial, thanks to the Samsung relationship, but sales to China have grown rapidly, to $9.9 million last year compared with $2.3 million in 2008.

The top three investors in Inphi are venture firms: Walden (holding 20.8 percent of shares), Tallwood (20.5 percent), and Mayfield (18.6 percent).

Underwriters for the IPO are Morgan Stanley , Deutsche Bank AG , Jefferies & Company Inc. , Thomas Weisel Partners , and Needham & Co.

— Craig Matsumoto, West Coast Editor, Light Reading

Pete Baldwin 12/5/2012 | 4:32:00 PM
re: Inphi Files for an IPO

For comms chips in general, there seems to be an inventory-building spike going on. Ed Zabitsky of ACI Research pointed out after Q1 earnings that the comms-chip companies (Broadcom/Marvell especially) were growing faster than their customers, which you wouldn't think is sustainable.

Inphi seems to have built up a nice business for itself on the memory-interface side. But I wonder if it's also benefitting from an overall spike in chip sales -- call it inventory buildup, double-ordering, whatever.

Pete Baldwin 12/5/2012 | 4:31:53 PM
re: Inphi Files for an IPO

Revenues on the table have been increased; my first pass didn't include the revenues from the Samsung partnership (listed on the S-1 as "Revenue from Related Party.")

Stevery 12/5/2012 | 4:31:52 PM
re: Inphi Files for an IPO

listed on the S-1 as "Revenue from Related Party."

I haven't had a chance to dig through the S-1, but I assume this means samsung owns equity?  In which case the right thing to do is assume that revenue will go away the moment samsung sells their stock.

Also: Anyone have a quick link to total money in?  (Almost equivalent to: will there be a reverse split of common before IPO?)

Pete Baldwin 12/5/2012 | 4:17:15 PM
re: Inphi Files for an IPO

I missed that Inphi launched on Nov. 11, priced at $12 (high end of the range) and has traded around $15-$16 mostly.

To Stevery's previous point: I count at least $54M that went into Inphi, and more than one VC stuck around for the full 10-year ride IIRC. Not a great return, but at least they got some reward for their tenacity.

I suppose you can count this as an optical IPO, but I get the feeling Inphi is better known in the world for its CPU memory interfaces.


spc_markl 12/5/2012 | 4:17:14 PM
re: Inphi Files for an IPO


Inphi will become more of an optical player in the long term.


Pete Baldwin 12/5/2012 | 4:17:13 PM
re: Inphi Files for an IPO

I agree, but their status on Wall Street is going to have a lot more to do with the PC business, I'd think.

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