China’s second-largest chipmaker poised for $2.5b IPO in Shanghai

Chinese chip manufacturer Hua Hong Semiconductor Ltd has received regulatory approval for an 18 billion yuan ($2.5 billion) IPO in Shanghai, according to a filing published late on Friday on the Hong Kong stock exchange.

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, reports Reuters.

According to its prospectus, Hua Hong intends to use the money to invest in a new fabrication plant - or fab - in the eastern city of Wuxi, with construction set to begin in 2023 and an eventual production capacity of 83,000 wafers per month.

The company 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’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.