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OmniVision Technologies, the listed developer of imaging sensor chips whose shares have been unusually active, could attract a foreign chipmaker, sources said. Share volume in the Sunnyvale, California-based company eased on Tuesday this week to less than half the preceding two sessions, when there was speculation OmniVision’s product line would attract listed Eastman Kodak, the No. 1 US camera maker.

With OmniVision’s market capitalization of USD 755m, Kodak could easily afford to buy it, bankers said. Kodak has a market capitalization of USD 6.66bn. But, a deal would make little strategic sense, as the majority of the chip designer’s products are designed for the cameras of mobile phones from listed Motorola and others, where Kodak has no presence, they added. Also, OmniVision this month predicted a fourth quarter loss because of declining prices for CMOS memory products. Since then, its shares have gained nearly 6%. An OmniVision VP acknowledged the speculation, and said he could not account for the unusually high volume. With about USD 341m in cash at the end of the third quarter, the company had previously announced a USD 100m share buyback. OmniVision shares have slumped 54% in the past year. Eastman Kodak representatives declined comment, noting their company has its own image sensors business that designs and manufactures chips for Kodak’s cameras and other digital products.

Wall Street has been rife with speculation since Kodak announced the sale of its health products sector for USD 2.55bn to Onex Partners of Canada in January. However, sometimes, this speculation has been focused on Kodak as a target, as with Dell of Texas as the PC and electronics company plots a turnaround in consumer electronics under the renewed leadership of founder Michael Dell. Dell’s market capitalization is USD 54.1bn.

CEO Antonio Perez said last month the health products sale proceeds would be earmarked for debt reduction, investment in the company’s new line of consumer printers that rival listed Hewlett-Packard, and making Kodak a leader in digital products. Kodak exited 2006 with USD 1.47bn in cash, which Perez said he did not plan on using for major acquisitions. Kodak shares are down about 19% over the past year.

Meanwhile, industry bankers suggested that OmniVision may have been a victim of the recent woes of listed Motorola, the biggest US mobile phone maker, which has forecast a first quarter loss. Its intellectual property, though, might be attractive to a foreign chipmaker interested in its CMOS designs, such as private NXP of the Netherlands, the former Royal Philips semiconductor business, or STMicroelectronics. Also, because makers of dynamic random memory (DRAM) chips can easily adapt their lines to make imaging sensors, OmniVision could also interest listed Samsung Electronics of South Korea or Toshiba of Japan, an industry banker said. Listed Micron Technology of Idaho, the largest US DRAM maker, would be an unlikely bidder on antitrust grounds, though.

Virtually all of OmniVision’s designs are manufactured at listed Taiwan Semiconductor Manufacturing, in which Philips is a minority investor. Souring any takeover deal could be the chip designer’s announced plans to spend at least USD 100m on product development over the next year, which would reduce the cash pile, another industry banker said. Average daily volume for OmniVision shares for the past 90 days is 1.4m shares. Last December, amid speculation the company was to be acquired by a unit of listed General Electric, the record one-day volume was 10.1m shares. OmniVision previously reported third-quarter eased 2% to USD 134.4m as net income plunged 85% to USD 4.1m.

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