Hua Hong Semiconductor, second largest China’s chip maker, posted modest gains in its Shanghai stock exchange STAR Market debut on Monday, reflecting a weak market sentiment and investor caution amid mounting Sino-U.S. chip rivalry.
Hua Hong China chip makers
Hua Hong semiconductor, China chip makers shares opened 13% higher on tech-focused shanghai stock exchange STAR Market, Hua Hong shares quickly faltered. The Hua Hong semiconductor opened at 58.88 yuan in Shanghai on Monday, 13 per cent higher than the offer price of 52 yuan. The stock jumped by as much as 15 per cent in morning trading before trading 5.5 per cent higher at 54.86 yuan at the break. About 46 million shares changed hands, representing 44 per cent of its free-floating shares.
Hua Hong shares
As of 0225 GMT, Hua Hong shares was changing hands at 54.6 yuan ($7.60), just 5% higher than its offer price of 52 yuan. The Shanghai Composite Index was down 0.6%, while Hua Hong semiconductor’s Hong Kong listed shares declined more than 7%.
Hua Hong funding
China’s chip makers Hua Hong raised $3 billion in biggest public offering this year, joining a long queue of china chip makers to tap the stock market to fund expansion as Beijing seeks self-sufficiency in an escalating technology war with Washington.
U.S.-China tensions over semiconductors began with the Trump administration’s trade war and have ratcheted up under President Joe Biden’s leadership as Washington looks to undercut Beijing’s efforts to build its high-tech industry.
“It’s another source of funds for Hua Hong in an industry with famously high capital expenditure requirements,” Stewart Randall, a Shanghai-based chip analyst at consultancy Intralink, said about Hua Kong’s share sale. “It will help it expand its mature node capacity, which is a focus for China right now.”
Randall said the money raised by Hua Hong semiconductor is not huge in a capital-intensive industry, but shows China chipmakers are broadening fundraising channels in addition to government backing.
Hua Hong semiconductor will use most of the proceeds to boost capacity at a facility in Wuxi, in eastern Jiangsu province, according to the company’s prospectus.
All about Hua Hong Semiconductor IPO
The state-backed National Integrated Circuit Industry Investment Fund, also called the Big Fund, bought 3 billion yuan worth of shares in its Shanghai share sale.
The IPO is the largest on the mainland stock market this year and also the second largest globally only after the US$4.37 billion offering by US consumer health company Kenvue, according to Bloomberg data.
A lacklustre stock market has led investors to seek opportunities from thematic investments, such as China’s tech self-reliance and artificial intelligence. China’s CSI 300 Index has risen about 3 per cent this year, underperforming other major benchmarks in the region. Japan’s Nikkei 225 and Taiwan’s Taiex have advanced more than 20 per cent in the period.
Beijing hopes to grant domestic semiconductor makers easy access to the capital market to spur their growth amid a US-led campaign to block China’s access to cutting-edge technologies.
