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Chipmaker SMIC Prepares for China’s Biggest Share Debut in a Decade

By Ding Yi / Jul 15, 2020 01:28 PM / Business & Tech

Hong Kong-listed Chinese chipmaker Semiconductor Manufacturing International Corp. (SMIC) will start trading its shares on Shanghai’s Nasdaq-style high-tech STAR Market on Thursday, as Beijing pursues self-reliance in chip manufacturing amid tensions with Washington.

SMIC has raised 46.3 billion yuan ($6.6 billion) in its secondary offering on the Shanghai bourse through the sale of 1.68 billion shares priced at 27.46 yuan each, according to a company statement Wednesday. The offering has an overallotment option allowing the total to jump to 1.94 billion shares.

The offering is the biggest share sale on mainland stock markets since Agricultural Bank of China’s 68.5 billion yuan initial public offering (IPO) in 2010. Heavy subscriptions suggest SMIC could actually raise as much as 53.2 billion yuan.

SMIC said in its previous listing prospectus that it would use the proceeds to develop 12-inch chips, supplement working capital and bankroll the research and development of advanced technologies.

The company’s upcoming mainland listing comes as China seeks to reduce dependence on foreign technologies at a time when the U.S. is tightening restrictions on tech exports to Chinese firms.

SMIC began mass-producing 14-nanometer chips in 2019, but still lags far behind its stronger rivals, some of which started volume production of more advanced 7-nanometer chips in 2018, the statement said. Smaller chips allow more computing power to fit in a given space.

In the statement, SMIC also expressed concerns over ongoing China-U.S. trade frictions, which it said may bring uncertainties to its production and operations. In May, the U.S. required foreign companies using American chipmaking technology to obtain a U.S. government license before supplying certain chips to Huawei.

This story has been updated to correct one term and one tense mistake. SMIC raised the 46.3 billion yuan in a secondary offering. It was the biggest share sale on mainland since Agricultural Bank of China’s 68.5 billion yuan IPO.

Contact reporter Ding Yi (yiding@caixin.com)

Related: SMIC Doubles Size of Shanghai Listing to $7.5 Billion


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