(Bloomberg) – Semiconductor Manufacturing International Corp. will carry out the largest share sale in Mainland China in a decade as China’s leading homegrown chip maker raises capital as the United States tightens restrictions on sales of technology to the nation.
SMIC could sell up to 53.2 billion yuan ($ 7.5 billion) of shares, as it released details of the offer in a statement Sunday to the Shanghai Stock Exchange. In May, analysts estimated that a Shanghai listing could reach the $ 3 billion range. The offer would be the largest since the Agricultural Bank of China ‘s 68.5 billion yuan IPO in 2010. SMIC shares in Hong Kong rose as much as 10% more on Monday to a new record.
The company is China’s largest contract manufacturer of chipsets and an important part of Beijing’s vision to create a world-class, self-sufficient semiconductor industry. SMIC plans to use the proceeds from the stock sale to develop next-generation chip manufacturing to try to compete with Intel Corp. and Taiwan Semiconductor Manufacturing Co. Like TSMC, SMIC is a purported foundry that helps manufacture silicon based on the designs of other companies.
SMIC shares have tripled in Hong Kong this year, compared to a 9% drop for the Hang Seng index, due to trade friction with the US It will force Beijing to focus more on local technology and products. to replace imports. China’s state-backed funds injected $ 2.25 billion into a SMIC wafer plant in May.
The effort comes at a time when the Trump administration threatens to deny national companies like SMIC or Huawei Technologies Co. access to crucial components and circuits. Its listing is a boost to the STAR market, which has struggled to attract top tech companies since its launch last year.
The initial institutional offering for the shares was 165 times over-subscribed. The China Integrated Circuit Industry Investment Fund will underwrite 3.52 billion yuan of the offering as a strategic investor, while Singapore’s sovereign wealth fund GIC Pte. It will invest 3.32 billion yuan.
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