China chipmaker Hua Hong posts modest gains in Shanghai debut (updated)

Hua Hong Grace Semiconductor

07/08/2023 03:50

(Adds details and comments)
       SHANGHAI, Aug 7 (Reuters) - Hua Hong Semiconductor,
China's second-largest chip foundry, posted modest gains in its
Shanghai debut on Monday, reflecting a weak market sentiment and
investor caution amid mounting Sino-U.S. chip rivalry. 
    Hua Hong shares  688347.SS  opened 13% higher on Shanghai's
tech-focused STAR Market, but quickly faltered.
    As of 0225 GMT, the stock was changing hands at 54.6 yuan 
($7.60), just 5% higher than its offer price of 52 yuan. The
Shanghai Composite Index  .SSEC  was down 0.6%, while Hua Hong's
Hong Kong-listed shares declined more than 7%.
    Hua Hong raised $3 billion in China's biggest public
offering this year, joining a long queue of local chipmakers to
tap the stock market to fund expansion as Beijing seeks
self-sufficiency in an escalating technology war with
Washington.
    U.S.-China tensions over semiconductors began with the Trump
administration's trade war and have ratcheted up under President
Joe Biden's leadership as Washington looks to undercut Beijing's
efforts to build its high-tech industry.   
    "It's another source of funds for Hua Hong in an industry
with famously high capital expenditure requirements," Stewart
Randall, a Shanghai-based chip analyst at consultancy Intralink,
said about Hua Rong's share sale. "It will help it expand its
mature node capacity, which is a focus for China right now."  
    Randall said the money raised by Hua Hong is not huge in a
capital-intensive industry, but shows chipmakers are broadening
fundraising channels in addition to government backing.
    Hua Hong will use most of the proceeds to boost capacity at
a facility in Wuxi, in eastern Jiangsu province, according to
the company's prospectus.
 ($1 = 7.1888 Chinese yuan)

 (Reporting by Li Gu and Brenda Goh in Shanghai; Mo Yelin in
Beijing; Editing by Muralikumar Anantharaman and Himani Sarkar)
 ((Li.Gu@thomsonreuters.com;))