United States-based audio technology provider SRS Labs plans to spin off ValenceTech, its wholly owned semiconductor components design unit, on the Growth Enterprise Market (GEM). ValenceTech has appointed DBS Asia Capital as its listing sponsor, but has not finalised the fundraising amount and listing schedule. ValenceTech chief executive Thomas Wan would not comment on the listing plan, but said its Nasdaq-listed parent had indicated its target was to spin off ValenceTech this quarter. ValenceTech, formed in 1995, was formerly a joint venture between Valence Semiconductor and the mainland's largest personal computer maker, Legend Holdings. Through a merger in 1998, ValenceTech became a wholly owned unit of SRS Labs. ValenceTech, in turn, holds about 10 per cent of SRS Labs. Mr Wan said the company planned to use proceeds from the listing to acquire other integrated circuit design houses in the region, a move he said would help it expand sales to other markets. Despite volatility and sharp correction on the Nasdaq market and GEM in recent months, Mr Wan said semiconductor companies in general were still trading at relatively high valuations. 'Even with the downturn in the Nasdaq market, investors are still quite bullish in the semiconductor sector. We climbed out of the downturn 12 months to 18 months ago.' ValenceTech designs integrated circuits mainly for consumer electronic products, such as telecommunications equipment, personal computers, electronic games and personal digital assistants. As a so-called 'fab-less' semiconductor components maker, the company does not own in-house production facilities and contracts out orders to manufacturers in Singapore, Israel and South Korea. Turnover fell from about US$40 million to about US$33 million for the year to December 31 from a year earlier. However, net profit rose from US$2.7 million to US$3.4 million. Net loss narrowed from about US$1.3 million in 1996 to about US$500,000 in 1997.