Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Chinese video-processing semiconductor company Vimicro (UNKNOWN:VIMC.DL) fell as much as 19% on Tuesday. The stock rebounded slightly in the afternoon, closing the day at a 15% loss. The stock is currently trading 45% below 52-week highs, which were set in early May.

So what: Vimicro was caught in a perfect storm today. First, fellow semiconductor designer Advanced Micro Devices (NASDAQ:AMD) slashed its second-quarter guidance, throwing shade over the PC market and everything even remotely connected to it. Then, China-based stocks started selling off as weakness in the Shanghai and Hong Kong stock markets sparked motion on Wall Street.

Now what: Either one of these singular events would be enough to put a dent in Vimicro's valuation. Both of them hitting on the same day? That hurts.

Looking ahead, analysts still see overvalued stocks across the Chinese exchanges and expect further corrections. As for the PC market slowdown, it's very much a real thing that will take some time working through the supply chains of system builders on a global level.

Doing business with the government: Vimicro CEO John Deng, right, shaking hands with Chinese president Jinping Xi in 2013. Image source: Vimicro.

On the upside, Vimicro's exposure to the sluggish PC sector is limited. The company does produce web cams for PC users, but its bread and butter is in the market for video surveillance systems. Not to be cynical, but video surveillance in China seems to be a market with true long-term legs. In valuation terms, the stock does look expensive with a P/E ratio of 47 times trailing earnings, but analysts expect dramatically higher earnings in the coming quarters. Using Street estimates, Vimicro's P/E ratio drops below 9 times forward earnings.

Furthermore, Vimicro founder, CEO, and Chairman John Deng is attempting to buy control of the entire company with an open-market offer of $13.50 per American depositary share. If successful, that bid would work out to a 50% premium over Tuesday's closing price. In other words, investors are betting that Deng's bid will fail.

All told, Vimicro appears to have more upside than downside at these prices, especially since John Deng's buyout bid provides a genuine (if imperfect) quick-turn profit opportunity. Not that we Fools recommend playing the short game in general, but I've seen worse speculative market plays than today's Vimicro.