Fabless FADU taps institutional demand to raise about $151 mn

FADU Technology, the first unicorn in South Korea’s semiconductor sector, has embarked on a process to raise up to 193.8 billion won ($151 million) in an initial public offering next month to develop next-generation semiconductors to lead the global data center chip market.

The Korean fabless startup that develops architecture for solid-state drive (SSD) controllers and storage products, on Monday commenced its two-day bookbuilding session with institutional investors to sell 6.25 million shares, including 350,000 shares owned by its employees under an employee stock ownership plan, as new shares.

The total shares up for grabs would account for 13% of its entire issued shares once they are listed.

FADU’s indicative IPO price band is set between 26,000 won and 31,000 won apiece. The company would raise up to 193.8 billion won if it sells the shares at the top end of the guided price range.

Its market capitalization would also reach 1.49 trillion won.

FADU will use the IPO proceeds to mass produce its chips and develop next-generation chip architecture, such as artificial intelligence chips and the Compute Express Link (CXL), a new interface to interconnect processors like central processing units (CPUs), multiple memory devices and accelerators like graphics processing units (GPUs), between 2027 and 2030 to offer data centers across the world a comprehensive semiconductor package.

“(Our) SSD controllers for corporate use are ready for commercial production, and they are recognized by global data centers as one of the world’s best products in terms of performance and reliability,” said FADU.

KOREA’S FIRST CHIP UNICORN

Founded in 2015, the company became Korea’s first unicorn, or a private company worth $1 billion or more, in the country’s semiconductor sector in February when it raised 12 billion won during its pre-IPO funding round.

It received more than its initial target, underscoring high expectations for the system chip market set to take off thanks to surging demand for the 5G network, autonomous driving, AI and the Internet of Things as well as augmented reality.

System chips, or non-memory semiconductors, control logic, calculations and other functions, and they account for nearly 70% of the global semiconductor market worth 560 trillion won.

The SSD controller, in which FADU specializes, is a system semiconductor that controls an SSD module.

The Korean fabless startup, headquartered in Seoul and with offices in Silicon Valley, California, is led by Chief Executive and co-founder Lee Ji-hyo, a former partner at Bain & Company, and Chief Technology Officer and co-founder Nam Eyee-hyun, a former SK Telecom Co. researcher.

The company reported 32.5 billion won in operating losses in the first three months of this year on sales of 17.6 billion won.

It plans to confirm its IPO price early this week and kick off its public subscription July 27 and 28.

It aims to make its Kosdaq market debut on August 7.

NH Investment & Securities Co. is the lead underwriter, joined by co-underwriter Korea Investment & Securities Co.

Write to Jeong-Cheol Bae at bjc@hankyung.com

Sookyung Seo edited this article.