Semiconductor maker going public
▶ Move to accelerate R&D, self-reliance of China’s chip industry
Chinese chipmaker Semiconductor Manufacturing International Corp (SMIC)’s fasttrack listing and fundraising at Shanghai’s Sci-Tech Innovation Board will not only accelerate the industry leader’s research and development (R&D) ability, but also mark the beginning of the fast development era of the country’s semiconductors.
Domestic investors’ enthusiasm to purchase shares in the firm shows that the whole country are all supporting the chips-manufacturing sector. It is a welcome injection of confidence to Chinese tech firms that are coming under pressure because of intensified US technology sanctions, said analysts.
SMIC is estimated to have raised 46.29 billion yuan ($6.55 billion) in the Shanghai public offering, more than double its initial target of raising only 20 billion yuan. The company set the IPO price of its shares to be traded in Shanghai at 27.46 yuan each.
It makes the firm not only the largest IPO on the Shanghai Stock Exchange’s NASDAQlike STAR Market, but also the largest IPO in the A-share market in the past 10 years.
“SMIC’s fast-track listing on the STAR Market is an explicit indication of the national push for a homegrown semiconductor manufacturing giant,” an industry insider told the Global Times on Tuesday.
Chinese regulators decided to fast-track the SMIC IPO, approving it on June 19 just two weeks after the company applied to go public. The process normally takes three to six months.
In May, SMIC secured $2.2 billion of investment from Chinese state-run investors.
An analyst from a securities firm told the Global Times on Tuesday that with the expansion of leading chip makers such as SMIC, homegrown semiconductor materials herald a “golden era” in the coming years, leading to the development of the whole industry.
Founded in 2000, SMIC is the Chinese mainland’s largest contract chipset manufacturer, and a key player in China’s drive to develop a domestic semiconductor industry that will relieve its reliance on foreign supplies, especially amid the US’ intensified crackdown on Huawei Technologies.
SMIC said in its previous prospectus that it would use 40 percent of its planned 20 billion yuan fundraising to ramp up production of 12-inch wafers in its massive Shanghai plant.
Analysts said the higher than expected fundraising figure will give SMIC a much-needed shot in the arm to speed up research and development into producing 7-nanometer chips.
With the capital injection, SMIC could march into the production of 7-nm and even 5-nm wafers in the coming three years, Ma Jihua, a veteran industry analyst, told the Global Times Tuesday.
Xiang Ligang, an industry analyst, told the Global Times that an important reason why SMIC’s technology advance has been slow in past years was the lack of customers. If Huawei and other Chinese tech firms shift production capacity to SMIC, there will be a major breakthrough in R&D and production capacity.