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Across the Strait
MediaTek, Fubon and Foxconn
Lackluster Stock Market A Headache for Investors

Why is Taiwan’s stock exchange failing to retain strong, successful companies? Share prices are falling short of expectations, raising capital is difficult, and fewer promising companies are going public here.

Photos: cw

In November, talk of the "Goodix miracle" dominated the Shanghai stockbroker community. On November 11, Shenzhen Huiding Technology Co. Ltd, which sells its smartphone recognition chips under the trade name Goodix, closed limit up for the 20th day in a row. Disappointed investors who hadn't been able to get their hands on Goodix shares were anxiously pestering stockbrokers, demanding an answer to the question "Will Goodix shares close limit up again tomorrow?" Goodix was the talk of the town as corporate investors, stockbrokers and individual investors scrambled to get in on the share's exceptional rally.

MediaTek vs. Goodix Miracle

With a stake of 20%, Taiwanese high-tech firm MediaTek is a major shareholder in Goodix. The differences between the stock markets in Taiwan and Shanghai become obvious when one looks at the performance of MediaTek and Goodix in terms of raising capital through these two bourses.

Goodix listed on the Shanghai Stock Exchange at a price of 19.42 renminbi (RMB). After closing limit up for 20 consecutive days, its share price had increased 7.76-fold to 170.98 RMB for a price-earnings-ratio of 113.

Goodix manufactures fingerprint recognition chips. One in three Chinese smartphone users chose a Chinese brand. Each of these smartphones is likely to contain a Goodix fingerprint recognition chip. People in China habitually pay with their smartphones, be it meals, taxi fares, or online shopping. All it takes to complete a transaction is a "beep."

Goodix's market value stands at 76.086 billion RMB (about NT$357 billion), once surpassing the market value of its major shareholder MediaTek, which is valued at NT$340 billion, and outdoing all other IC design houses in Taiwan in terms of market cap.

Undervalued Taiwanese Companies

While the price-earning ratio of Goodix skyrocketed to 113 in Shanghai, the price-earnings ratio of MediaTek, Taiwan's largest IC design company, stands at only 15. MediaTek is the world's 11th-largest IC design house, whereas Goodix has not even made it into the ranks of the top 100.

Originally, fingerprint recognition chips played only a minor role in the smartphone supply chain. However, realizing Goodix's competitive edge, MediaTek invested NT$3.9 million (about NT$124

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