Shares in the Shanghai-based company continued their descent on Friday, dropping 9.55% in Hong Kong and 9.6% in Shanghai. This follows a volatile week that saw the stock plummet by double digits after initial media reports of the Wednesday raid surfaced. Montage, a specialist in memory interface chips critical to AI data processing, confirmed the investigation in a regulatory filing, noting that it is currently cooperating with authorities. No employees have been charged with wrongdoing, and the company maintains that its core operations remain unaffected by the probe.
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Montage Technology Shares Slide Amid South Korean Antitrust Probe
South Korean prosecutors have raided the local office of Montage Technology, triggering a sharp selloff for the Chinese chipmaker. The investigation into alleged price-fixing of semiconductor components adds significant pressure to the firm, which relies on the South Korean market for more than half of its total revenue.
To counter the market decline, the company issued an aggressive financial outlook, projecting first-half net profit to climb as much as 81% to reach between 1.9 billion and 2.1 billion yuan. Alongside this upbeat forecast, the chairman has proposed an onshore share buyback program valued at up to 600 million yuan. While analysts at Citi anticipate that the ongoing legal uncertainty will likely drive further price volatility, they suggest these defensive measures may provide a necessary floor for the stock. The company’s struggles are further compounded by a broader retreat in Asian chip stocks, driven by growing investor concerns regarding the sustainability of current AI capital spending levels.
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