Caixin
Nov 28, 2022 07:57 PM
TECH

Chipmaker Gets Go Ahead for $1.7 Billion Shanghai IPO

What’s new: Contract microchip-maker Semiconductor Manufacturing Electronics Shaoxing Corp. (SMEC) has received approval for a Shanghai IPO, becoming the latest Chinese firm in the industry to seek a share sale on the mainland where the government is accelerating a drive to become self-sufficient in semiconductors.

The Zhejiang province-based startup plans to sell 1.7 billion shares on Shanghai’s tech-focused STAR Market to raise 12.5 billion yuan ($1.7 billion), it said in a prospectus on Friday.

The funds are earmarked to build a second phase of a semiconductor manufacturing plant, improve technology for making and packaging chips used in microelectromechanical systems and power devices, as well as supplement working capital, it said.

What’s the background: Founded in 2018, SMEC generates 90% of its revenue from contract manufacturing chips used in electric vehicles, consumer electronics, home appliances and wind power generators, according to the prospectus.

With Shaoxing Yuecheng Integrated Circuit Industry Fund Partnership and Semiconductor Manufacturing International Corp. (SMIC) as its major shareholders, SMEC has yet to turn a profit. It recorded a net loss of 1.2 billion yuan in 2021, compared with 1.4 billion yuan in 2020 and 772 million yuan in 2019, the prospectus showed.

SMEC predicts that it will achieve profitability in 2026 if no further investments are made to add production lines.

Earlier this month, Hong Kong-listed contract chip-wafer maker Hua Hong Semiconductor Ltd. filed for a listing on STAR Market to raise 18 billion yuan.

Contact reporter Ding Yi (yiding@caixin.com) and editor Flynn Murphy (flynnmurphy@caixin.com)

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