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MStar closes 10 percent higher on its debut day

MStar Semiconductor Inc. closed up 10 percent on its debut yesterday, becoming the second most expensive IC design share after MediaTek.

The stock had its primary listing on the Taiwan Stock Exchange yesterday in one of the most watched initial public offerings of recent times.

The share, which had its IPO price of NT$300, surged by 15.3 percent to NT$346 right after the market opened yesterday. However a selling spree emerged after the initial rally, dragging the stock down to a low of NT$325.

At the end of trading, the stock closed at NT$330, up 10 percent, easily surpassing Richtek to become the second most expensive IC design stock after MediaTek, which fell 1.85 percent to NT$423.5. Richtek closed higher at NT$255. The weighted index fell 0.42 percent to 8,861.1.

Industry experts have raved about MStar, an IC design firm that has risen rapidly in the LCD monitor and LCD TV chip market. Sales this year could top US$1 billion, becoming Taiwan's third largest IC designer after MediaTek and Novatek and the world's 13th largest fabless foundry.

The firm has expanded into the Chinese mobile phone chip market and is expected to take a 10 percent share next year. Analysts are hoping the firm will have a price-to-earnings ratio of 18, higher than that of MediaTek, and have set their target price for the firm at NT$360.

MStar makes similar products as MediaTek and is seen as the IC design leader's chief rival.

Analysts' upbeat outlooks have spurred enthusiasm among investors, who have applied to purchase 280,647 units of MStar stock, despite its expensive IPO price of NT$300. Each stock unit is 1,000 shares.

Since the applications outnumbered the actual shares issued, investors had to take part in a draw to get the shares, and the odds of getting a unit were 2.99 percent.

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