ACTS Going Private according to EETimes
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Actions to Split in Two, Break Up With Nasdaq
Junko Yoshida
8/11/2014 11:10 AM EDT
3 comments
MADISON, Wis. — EE Times has learned that Actions Semiconductor Co. Ltd., a Zhuhai, China-based fabless chip company, is planning to split in two and delist itself from Nasdaq.
The move illustrates a new phase for the Chinese fabless company, reflecting its growing pains (including internal conflicts among different business units) and management ambitions to qualify for government grants by morphing into two private, domestic entities.
Citing “a scheduling conflict,” Actions issued a press release on July 31 that it would delay its Q2 financial results (ended June 30) until Friday, Aug. 15. EE Times’s investigations, however, reveal that the delay was necessitated by major business reorganizations, requiring negotiations with employees about their stake in the new companies. Actions Semiconductor had not returned a call by press time.
Actions is said to be dividing the company along product lines. One unit will focus on multimedia -- such as MP3 and MP4 players and Bluetooth and WiFi boom-boxes -- the other on media tablets and over-the-top set-top boxes.
Internal conflicts
Since Zhenyu Zhou became the CEO at Actions in 2011, he brought much-needed focus to the company by steering it toward the Android-based tablet market. Meanwhile, Actions’ multimedia business unit has maintained a strong foothold in the traditional consumer market such as MP3 and MP4 players. The split, therefore, conforms roughly to software platforms: Android vs. embedded.
Actions, in pursuit of the non-Apple market like everyone else in China, is caught between a rock and a hard place, however.
Actions had no intention to get stuck in the business of traditional MP3 and MP4 players, but that multimedia business -- although it had little prospect for growth -- proved highly profitable. On the other hand, the Android tablet market represented the company’s future with higher growth. But that business was bleeding cash in a market crowded with other strong fabless chip vendors including China’s Allwinner (also based in Zhuhai, founded by former management of Actions) and Rockchip and Taiwan’s MediaTek.
Actions' employees within these two business units reportedly have often clashed over pay raise and business agendas.
By dividing into two entities, Actions’ hope is to allow each to “focus on its own vision and execution,” according to one industry source based in China. “It will also give incentive to the new management teams (new shares to be issued).”
Actions’ tablet/over-the-top set-top box groups are reportedly keen on taking on new projects including wearables, smart home, and Chromebook. Wearables and smart home will use Android Wear OS, while Chromebook will use Chrome OS, both from Google.
Actions recently licensed the ARM Cortex-A50 processor family to target the 64-bit tablet market. At the time of its licensing announcement in June, Actions said its first SoC is “due to be available in late 2014, making it one of China’s leading technology design companies delivering an ARM-based 64-bit chip for tablet devices.”
Sources pointed out that Actions’ tablet/set-top group is engaged in discussions with Google, hoping to take its ARM 64-bit SoC beyond Android tablets and optimize it to better support Chrome.
In pursuit of China fund
Executives at chip companies in China have been jockeying to grab what appears to be a huge chunk of the money that China’s central and local governments are poised to pump into the domestic chip industry.
According to several different sources in China, rather than expecting the government to dictate which IC industry sectors should get investment money, the idea that has gained consensus among locals today is to "set up a fund" and let professional investors place bets on which Chinese entities -- fabless, foundries, and/or research institutes -- deserve the funding. Moreover, they say, the overseers of such investment would not be the government, but investors, who would demand tangible results and a real return on their investments.
At a time when Chinese companies trading on US exchanges reportedly have grown frustrated with the US investment community, Actions is believed to be one of the many Chinese fabless chip vendors looking for fresh investment
