China’s second-largest chipmaker poised for 18 billion yuan IPO in Shanghai

CHINESE chip manufacturer Hua Hong Semiconductor has received regulatory approval for an 18 billion yuan (S$3.5 billion) IPO in Shanghai, according to a filing published late on Friday (Nov 7) on the Hong Kong stock exchange.

The planned initial public offering (IPO) comes as China’s chip companies gear up for steeper competition with the United States due to geopolitical tensions.

According to its prospectus, Hua Hong intends to use the money to invest in a new fabrication plant – or fab – in the eastern city of Wuxi, with construction set to begin in 2023 and an eventual production capacity of 83,000 wafers per month.

The company currently has four fabs in total – three 8-inch fabs in Shanghai, and one 12-inch fab in Wuxi currently expanding to 95,000 wafers per month. The proceeds from the IPO will also go to upgrading the latter fab, according to its prospectus.

Hua Hong’s Shanghai IPO will follow that of China’s Semiconductor Manufacturing International (SMIC), which, like Hua Hong, went public on Shanghai’s tech-centric STAR market in 2020 after it listed in Hong Kong years earlier.

That IPO raised 6.6 billion yuan, making it the largest-ever on the then-new board and the largest in China since 2010. SMIC’s IPO arrived just as tensions between the United States and China were heightening over semiconductor technology.

Hua Hong’s planned IPO comes after Washington passed unprecedented export controls on Chinese chip makers. In particular, it barred US based equipment makers from selling tools to Chinese foundries for production of logic chips produced at 14-nanometres and below.

Hua Hong specialises in mature technology, and generates most of its revenue making chips using 55-nanometre process technology. The company has a global market share of 3.2 per cent of the foundry business, according to research firm TrendForce. REUTERS