What They Say
Fabless chip maker Pixelworks said that it had a strong quarter for Q2 with revenue up more than 50% from last year at $14.05 million but with a net loss of $4.4 million. The projector chip business increased over 100% sequentially and 30% year-over-year, reflecting a recovery in customer and end market demand. It also announced a $10.6 million co-development agreement with an existing Japanese OEM customer to develop an advanced SoC for a planned next-generation product family for the 3LCD Projector market.
The firm also announced:
- A strategic plan to transform Pixelworks’ Shanghai subsidiary (“PWSH”) from an R&D center into a profit center for the Mobile, Projector, and Video Delivery businesses, including the positioning of that subsidiary to qualify and seek an IPO on the STAR Market in China
- Signed agreements for funding commitments into PWSH from private equity and strategic investors, with our existing partner MTM contributing amounts in RMB equivalent to approximately $20.0 million and new investors Verisilicon, Canaan, and Chipone Technology contributing amounts in RMB equivalent to approximately $3.1 million, $3.1 million, and $4.6 million, respectively
- Signed agreements for funding commitments into PWSH by employee stock ownership platforms representing approximately 75% of PWSH employees and totaling amounts in RMB equivalent to approximately $12.3 million.
The firm said
“We believe a listing in China will provide expanded access to future potential growth capital at what could be meaningfully higher valuations than what Pixelworks trades at today in the U.S. This plan will also allow Pixelworks to increase the focus on its TrueCut business, as well as other licensing opportunities”.
What We Think
The firm’s cash balance dropped 25% or thereabouts in the first half of this year and at the current rate of losses it wouldn’t be around for a lot of quarters. Still, clearly the projector maker has confidence that the firm will survive in some form.
