[IPO Spotlight] JaramTech Faces Setback Due to Weak US Telecom Market Ahead of Listing

Slight Adjustment to IPO Price Due to Revised GigaWire Revenue Estimates
Expectations to Break Away from UK ARM's Exclusive Technology Structure
Confidence in Growth with Advanced Technology

[Asia Economy Reporter Hyungsoo Park] JarumTech, a communication semiconductor design company, is resuming its listing on the KOSDAQ market by lowering the expected public offering price range. The company reflected the decrease in future earnings estimates due to major clients reducing their order volumes in its corporate valuation.

On the 14th, JarumTech announced it will offer a total of 1 million shares for its initial public offering (IPO), consisting of 900,000 new shares and 100,000 existing shares. The expected public offering price range is 18,000 to 22,000 KRW. From the 1st to the 2nd of next month, a demand forecast will be conducted targeting institutional investors, and the public offering price will be finalized. Subscription for general investors will take place from the 8th to the 9th. ShinYoung Securities is the lead underwriter.

Founded in 2000, JarumTech is a fabless non-memory semiconductor design company. It was the first in Korea to commercialize communication semiconductors for 5G (XGSPON SoC). It also developed the world's first integrated optical component PON stick required to connect 5G base stations. The company is recognized for its technological capabilities in communication semiconductor design and communication equipment development.

JarumTech possesses design technologies in areas such as ▲processor (CPU), ▲distributed processing, and ▲low power consumption. Unlike other fabless companies that license processors from the UK-based ARM, JarumTech uses its own designed processors, securing price competitiveness. It is also capable of designing processors optimized for specific products.

Previously, JarumTech submitted a withdrawal report for its listing on the 21st of last month. It explained that it postponed the public offering after comprehensively considering domestic and international market conditions and various internal and external issues that made it difficult to receive an appropriate corporate valuation.

Just 18 days after the withdrawal, on the 8th, the company resubmitted its securities registration statement. It presented a lowered expected public offering price range. Previously, it was set at 21,200 to 26,500 KRW, but was adjusted to 18,000 to 22,000 KRW.

The previous registration statement determined the expected public offering price based on JarumTech’s first-half performance. The newly submitted statement calculated corporate value based on third-quarter results this year. The projected net profit for this year decreased from 1.953 billion KRW to 1.782 billion KRW. The estimated net profit for 2024, used as a basis for valuation, was also lowered from 16.564 billion KRW to 14.448 billion KRW.

There was a change in the sales forecast for GigaWire. GigaWire products provide ultra-high-speed internet services at gigabits per second using telephone lines or coaxial cables. JarumTech exclusively supplies these products to the US company S. S was listed on the New York Stock Exchange (NYSE) in April this year. It was expected that the capital influx from the listing would aggressively expand service areas, but due to worsening domestic and international conditions, S recently requested a downward adjustment of order volumes.

S provides product supply plans for the following year at the end of each year. According to this, only 36.1% of the 164,272 units ordered by S from JarumTech this year are expected to generate sales. For next year, the forecast is 98,563 units, a 40% decrease compared to this year.

JarumTech is developing high-efficiency processor (RISC-V) technology usable in system semiconductor design as a next-generation growth engine. To break free from the monopolistic dominance of the UK-based ARM, it developed open processor technology that global companies such as Qualcomm, Google, and Intel are also developing. Additionally, in collaboration with the Korea Electronics Technology Institute (KETI), JarumTech is developing next-generation AI semiconductor chips capable of performing artificial intelligence (AI) computations on devices rather than servers.

The jointly developed neural processing unit (NPU) performs AI computations directly on end devices such as CCTV and cameras. Compared to the method of transmitting large volumes of data to servers for processing, this reduces data transmission and enables real-time processing without delay. JarumTech is responsible for chip development and commercialization. The development is supported by the Ministry of Trade, Industry and Energy’s next-generation intelligent semiconductor technology development project.

Baek Junhyun, CEO of JarumTech, expressed his ambition, stating, "As the size and importance of the system semiconductor market gradually increase, we will become a leading next-generation system semiconductor company recognized in the global semiconductor market based on our excellent technological capabilities."

This content was produced with the assistance of AI translation services.