Monolithic Power Systems MPWR
MPWR's Chinese tax filings show $262m missing revenue and near-zero inventory despite 90% production in China — accounting red flags point to 75-85% downside.
Thesis
Spruce Point argues MPWR is a U.S.-listed semiconductor company operating largely as a Chinese business, with ~90% of production and 58% of sales in China. Chinese tax filings for its three subsidiaries report just $73m of 2018 revenue versus $335m claimed to U.S. investors — a $262m (78%) gap — while reporting near-zero inventory despite consolidated inventory of $136m. Days inventory outstanding has exploded to 183 versus a 106-day peer average, mirroring patterns at prior fraud cases Vitesse and Sipex, where a former MPWR audit member concealed revenue overstatement. Deloitte was dismissed as auditor in March 2019 after deepening China scrutiny, the former CFO left under suspicious circumstances, insiders own just 3%, and the company squandered $126m on inflated real estate. Spruce Point values MPWR at $21-$35 versus $142, implying 75-85% downside.
SCQA
MPWR is a Nasdaq-listed power-chip designer trading at record-high multiples (37x EV/EBITDA), with ~90% of production and 58% of sales in China, praised by bullish analysts as a best-in-class takeover target.
Chinese tax filings disclose $262m less revenue than SEC filings, inventory is near-zero in China yet bloated at consolidation, days-inventory-outstanding has exploded to 183 days, and Deloitte was abruptly dismissed as auditor.
Spruce Point publishes a Strong Sell opinion exposing accounting red flags, governance lapses, CEO self-dealing, and opaque Bermuda/Singapore cash routing, urging investors to short the stock.
Downside scenarios project 75-85% losses with price targets of $21-$35/share versus the $142 market price, reflecting either revenue or margin overstatement plus multiple compression.
The three reasons
- 1
Chinese tax filings show $262m missing revenue — 78% lower than SEC filings
- 2
Days inventory outstanding at 183 vs. 106 peer average, echoing Sipex/Vitesse scandals
- 3
Deloitte dismissed as auditor in March 2019 after deepening China scrutiny
Primary demands
- Sell / short MPWR shares on 75-85% downside risk
- Demand disclosure of Company A (Microsoft) customer concentration
- Investigate reconciliation between Chinese tax filings and SEC revenue
- Scrutinize Bermuda/Singapore cash routing and auditor dismissal
KPIs cited
Pattern membership
Precedents cited
- Vitesse Semiconductor accounting scandal
- Sipex Corp revenue overstatement / gross margin restatement
- Super Micro (SMCI) revenue recognition delisting
Composition what's on the 95 slides
Slide gallery ·
Notes
Classic Spruce Point short report with cinematic CGI cover ('Powering Down Fab-U-Less Earnings', damaged-chips warehouse). Ben Axler (CIO) is quoted on page 3 but the cover credits only the firm; author_name set to Axler as the identified signatory voice. Strong SCQA, forensic reconciliation of Chinese tax filings to SEC filings, use of on-the-ground due diligence and former-executive interviews. Uses 'Bull Case Misperception vs. Investigative Reality' format (p.13) and precedent shorts (MOMO, iRobot, Mettler-Toledo, A.O. Smith) as track-record framing. No explicit stake disclosure; disclaimer states only that Spruce Point and subscribers hold a short position. Two-scenario valuation (overstated revenue vs overstated margins) rather than true SOTP.