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Techwell, a fabless semiconductor company for the red-hot video application market is looking to raise $86.25 million in an IPO. Lehman Brothers is slated to be the sole book runner on the deal. Target devices for the company's products include advanced TVs, multifunction LCD monitors, DVD recorders, camcorders, security surveillance systems and in-car displays. The proposed stock ticker is TWLL.

The company's S-1 filing contains a wealth of information on the company's technology and video application market, and is therefore relevant to Philips (PHG), Texas Instruments (TI), ATI (ATYT), Genesis Microchip(GNSS) and Zoran (ZRAN) among others.

Highlights from the filing:

Revenues: Our mixed signal semiconductors are used by over 95 companies, including Samsung, our largest customer, which represented 12% of our revenues for the nine months ended September 30, 2005. We began shipping our semiconductors in 1999, and to date, we have sold over 15 million semiconductors. Our revenues increased from $2.2 million in 2001 to $17.3 million in 2004 and reached $25.3 million for the nine months ended September 30, 2005. Although we incurred net losses through 2004, for the nine months ended September 30, 2005 our net income was $2.8 million.

Market: Video applications based on digital technology are experiencing rapid growth driven by significant improvements in the user experience, including enhanced video quality, increased functionality and reduced form factors. For example, according to DisplaySearch, the advanced TV market is expected to grow from 13.2 million units in 2004 to 101.8 million units in 2009, representing a compound annual growth rate of 50%. In addition, according to J.P. Freeman, the worldwide video surveillance market is expected to grow from $7.8 billion in 2004 to $18.3 billion in 2009, representing a compound annual growth rate of 18%. According to Telematics Research Group, shipments of navigation, entertainment and driver information systems are expected to grow from a combined 16.5 million units in 2004 to a combined 47.2 million units in 2009, representing a compound annual growth rate of 23%. These systems are causing the proliferation of in-car LCD displays in the automotive market.

Growth Strategy: Our objective is to be the leading provider of high performance, cost effective mixed signal semiconductors for multiple digital video applications. To achieve this objective, we expect to continue to pursue the following strategies:

Target Multiple High Growth Digital Video Applications. We address a number of digital video applications in the consumer, security surveillance and automotive markets that provide us with multiple high growth opportunities. Our products are incorporated into numerous applications that are experiencing significant growth, including advanced TVs, multifunction LCD monitors, DVD recorders, camcorders, security surveillance systems and in-car displays. We are also targeting design wins in video applications such as mobile TV phones and portable media players.

Develop Additional General Purpose and Application Specific Products. We provide our customers with both general purpose and application specific products. Our general purpose products principally decode analog video signals and can be used in all of our target applications. Our application specific products integrate our video decoder with our advanced digital processing technologies and target LCD display and security surveillance. We believe that our general purpose and application specific product strategy allows us to better address varying customer requirements, fully leverage our technology capabilities and achieve greater share within our target markets. We plan to maintain and expand upon this product strategy in the future. For example, in 2006, we plan to introduce a general purpose audio decoder that decodes the audio portion of an analog TV broadcast signal. The challenges associated with decoding audio are similar to those associated with decoding video. We believe that we can leverage our extensive expertise in TV broadcast signals as well as our expertise in developing video decoder products to develop audio decoder products.

Develop New Technologies. We plan to continue to develop additional technologies to address evolving customer requirements. For example, we are developing advanced display processing technologies, including motion adaptive deinterlacing and color management, which are important functions in advanced TV applications. In addition, we have expanded our research and development efforts and are developing HDTV demodulating and decoding technologies, which are important functions for receiving and processing digital TV broadcast signals. Consistent with our product strategy, we intend to incorporate these HDTV technologies into our general purpose and application specific products in the future.

Expand Customer Relationships. Our mixed signal semiconductors are used by over 95 companies in the consumer, security surveillance and automotive markets. We sell our semiconductors through sales and customer support personnel and sales and marketing offices in the United States, South Korea, Taiwan and China. We intend to continue to expand our sales, marketing and technical support capabilities to pursue additional design wins with our existing customers and to develop relationships with new customers in our target markets.

Source: Consumer Electronics Chip Vendor Techwell Files for IPO -- Summary of S1 (TWLL)