Hua Hong, the second-largest chip foundry in China after Semiconductor Manufacturing International Corp., was listed in Hong Kong in 2014. On Monday, its Hong Kong-listed shares dropped 7.4%. This listing comes as Chinese companies try to raise funds to increase the production of advanced chip technologies, due to China striving for autonomy in this field and Washington's attempts to block Beijing from these technologies.
Shares of Hua Hong, the Chinese chipmaker, rose 13% at the open of their listing on the Shanghai Stock Exchange's Star Market on Monday but rapidly lost their gains. Hua Hong, China's second-largest chip foundry following Semiconductor Manufacturing International Corp. (SMIC), opened at 58.88 Chinese yuan, an increase of 13.2% from their offer price of 52 Chinese yuan ($7.23). By mid-afternoon, the Shanghai-listed shares had dropped to 53.99 Chinese yuan. The company, which manufactures semiconductors with advanced wafer process technologies, sold 407.75 million shares at 52 Chinese yuan each in their filing, raising a total of 21.2 billion yuan ($2.95 billion). This is the biggest IPO in mainland China this year, according to EY's global IPO report. Hua Hong's products are used in a variety of fields, such as consumer electronics, communications, computing, industrial, and automotive. As well as being on the Shanghai Stock Exchange, they have been on the Hong Kong exchange since 2014, though their Hong Kong-listed shares dropped by up to 7.4% on Monday. Phelix Lee, an equity analyst at Morningstar Asia, stated the size of Hua Hong's IPO is not particularly noteworthy, referring to SMIC's offering of 46.28 billion yuan ($6.62 billion) in 2020. Hua Hong's listing is part of the government's attempts to build up local chip technology and become independent of advanced chip tech, while the US tries to restrict Beijing's access.
Hua Hong is the most recent semiconductor organization to expand with a first sale of stock in mainland China this year.In May, Semiconductor Manufacturing Electronics (Shaoxing) Corporation was listed on the Star Market and Nexchip Semiconductor likewise made its presentation there during that month.As per a Reuters report, China has contributed more than 1 trillion Chinese yuan ($140 billion) into its semiconductor industry. Local chip creators as of now receive advantages from government awards and state-financed research activities.
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