Top China chipmaker SMIC more than triples in Shanghai debut

[NEW YORK] Semiconductor Manufacturing International Corp (SMIC) surged 246 per cent on its Shanghai debut after the company sold shares in an offering that is set to be China's largest in a decade.

The Shanghai-based chipmaker opened at 95 yuan on its first day of trading in the Shanghai Stock Exchange's Star market. SMIC sold its shares at 27.46 yuan apiece, which would allow it to raise as much as 53.2 billion yuan (S$10.58 billion) if it fully exercises a greenshoe option. That would make it the largest mainland stock sale since Agricultural Bank of China's 68.5 billion yuan Shanghai initial public offering in 2010.

SMIC's mainland listing comes amid intensifying competition between the US and China for global tech supremacy. As the country's No 1 contract manufacturer of chipsets, SMIC plays an important role in Beijing's ambitions of becoming self-sufficient in semiconductor production following efforts by the Trump administration to curtail access by Chinese companies to key components.

Proceeds from the share sale will be used to develop next-generation chipmaking technologies as SMIC seeks to catch up to rivals such as Taiwan Semiconductor Manufacturing Co (TSMC), which makes CPUs for Apple and Huawei Technologies's most advanced smartphone models. TSMC, the world's largest contract chipmaker, is ready to commercialise 5nm technology, two generations ahead of SMIC's capabilities.

China Integrated Circuit Industry Investment Fund, Singapore's sovereign fund GIC and the Abu Dhabi Investment Authority are among institutional investors that participated in SMIC's share offering.

Shares of SMIC have more than tripled in Hong Kong this year, compared with a 9.6 per cent loss on the Hang Seng Index. The stock rose 2.2 per cent in Hong Kong on Thursday.

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