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China Chip Giant Hua Hong Set for $2.5bn IPO in Shanghai

Hua Hong Semiconductor, which specializes in mature technology, has been given regulatory approval for a $2.5-billion IPO in Shanghai


Germany has blocked the sale of one of its microchip factories to a Chinese-owned company due to security concerns.
Germany has blocked the takeover of Elmos, a chip-maker based in Dortmund, because of concerns over China's strategic purchase of key companies and technology. Photo: Reuters.

 

China chipmaker Hua Hong Semiconductor Ltd has been given regulatory approval for a $2.5-billion IPO in Shanghai, a Hong Kong stock exchange filing said on Friday.

Hua Hong intends to use the money to fund a new fabrication plant in the eastern city of Wuxi, with construction to begin in 2023.

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.

Washington has passed unprecedented export controls on Chinese chipmakers. In particular, it barred US equipment makers from selling tools to Chinese foundries for production of logic chips produced at 14-nanometers and below.

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Hua Hong’s Shanghai IPO will follow that of China’s Semiconductor Manufacturing International Corp (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, 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 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 specialises 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.

 

  • Reuters, with additional editing from Alfie Habershon

 

Read more:

 

Toyota’s Profit Drops 25% Due to Computer Chip Shortage

 

US Expects Allies to Back Chip Export Curbs on China

 

US Chipmaker Marvell Chops Research Staff in China

 

 

 

Alfie Habershon

Alfie is a Reporter at Asia Financial. He previously lived in Mumbai reporting on India's economy and healthcare for data journalism initiative IndiaSpend, as well as having worked for London based Tortoise Media.

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