Haitong Securities and China International Capital Corporation Limited are coaching China’s largest semiconductor foundry, Semiconductor Manufacturing International Corporation (SMIC) (HKG 0981), for an initial public offering on Shanghai’s tech-focused Star Market, according to information posted on the China Securities Regulatory Commission’s website on Thursday.
On May 5, Shanghai-based SMIC disclosed in a filing that the company plans to issue up to 1.69 billion RMB-denominated new shares to public institutional and individual investors and list these common shares on the Shanghai Stock Exchange’s Science and Technology Board, also known as the Star Market. The pricing of the offering is undecided at present.
All individual shareholders with stakes of 5% or higher, directors, and high-level executives must receive instruction in listing-related laws and regulations, corporate structure, financial management, and information disclosure—a requirement for listing on China’s A-share market.
SMIC said that 40% of the proceeds of this offering will be used for the “12-Inch SN1 Project”—which includes plans to develop new assembly lines for 14nm and higher process chips—while 20% will go towards R&D, and the remainder will be spent on replenishing working capital.
Last May, SMIC notified the New York Stock Exchange of its intentions to delist the company’s American depositary shares, KrASIA reported. The firm highlighted several reasons behind the decision, including the limited trading volume in the US relative to its worldwide volume, and the significant administrative burden and costs of maintaining its listing in New York. It added that neither the Sino-US trade war nor Huawei’s blacklisting by the US Department of Commerce factored into the move.
However, Reuters reported last month that Huawei is gradually shifting production of chips the company designed in-house away from Taiwan Semiconductor Manufacturing Company and towards SMIC in preparation for more US restrictions.
HiSilicon, Huawei’s semiconductor subsidiary, shipped 22.21 million smartphone System-on-a-Chip (SoC) units in the first quarter of 2020 in China, replacing US-based Qualcomm as the largest chip supplier in China, KrASIA reported. However, HiSilison is a “fabless” chip company, meaning they outsource the fabrication of chips they design and sell to foundries like SMIC.