China’s second-largest chipmaker poised for $2.5 billion IPO in Shanghai

Hua Hong Grace Semiconductor

07/11/2022 07:20

SHANGHAI, Nov 7 (Reuters) - Chinese chip manufacturer
Hua Hong Semiconductor Ltd  1347.HK  has received regulatory
approval for an 18 billion yuan ($2.5 billion) IPO in Shanghai,
according to a filing published late on Friday 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 Corp (SMIC)  0981.HK ,
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 U.S. based equipment makers from selling
tools to Chinese foundries for production of logic chips
produced at 14-nanometers and below.
    Hua Hong specializes in mature technology, and generates
most of its revenue making chips using 55-nanometer process
technology. The company has a global market share of 3.2% of the
foundry business, according to research firm TrendForce.
 (Reporting by Josh Horwitz
Editing by Mark Potter)
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