'No. 2 Chinese Foundry' Hua Hong Semiconductor Listed on Shanghai Stock Exchange... Largest Scale in Mainland China

"Funding Source Diversification... Expansion of Mature Process Production Capacity"

Chinese foundry (semiconductor contract manufacturing) company Hua Hong Semiconductor was listed on the Shanghai Stock Exchange on the 7th.

According to Bloomberg News, Hua Hong Semiconductor opened trading at 58.88 yuan (about 10,700 KRW) on the Shanghai Stock Exchange that day. The public offering price was 52 yuan, so it started 13% higher than that. This listing was achieved nine months after the Chinese government's approval in November last year, and it is the largest initial public offering (IPO) on the Chinese mainland this year.

[Image source=Reuters Yonhap News]

Hua Hong Semiconductor is the second-largest foundry company in China after SMIC. In the overall foundry industry, it ranks sixth after Taiwan's TSMC, Samsung Electronics, the US's GlobalFoundries, Taiwan's UMC, and SMIC, with a market share of 3.0% as of the first quarter of this year. It mainly produces semiconductors using mature processes of 28 to 55 nanometers (nm; 1 nm is one billionth of a meter) used in automobiles and home appliances.

Prior to this listing, Hua Hong Semiconductor conducted a public offering subscription targeting general investors on the Shanghai Stock Exchange last month. At that time, Hua Hong Semiconductor issued 408 million shares and raised 21.2 billion yuan. This allowed them to secure 18% more funds than the initial target of 18 billion yuan.

Reflecting this popularity, Hua Hong Semiconductor's stock price rose up to 15% in the early trading session but has since stabilized somewhat, recording an increase of around 5%. A major foreign news outlet evaluated this as a weakening of market investment sentiment amid intensifying US-China semiconductor hegemony competition, with investors paying close attention to conflicts between the two countries.

However, Ivan Lee, a fund manager at Royal Asset Management, told Hong Kong's South China Morning Post (SCMP), "The market expected Hua Hong Semiconductor's stock price to surge on the first day due to high awareness of the semiconductor industry," adding that traders believe Chinese semiconductor manufacturers can catch up with other foreign competitors.

Hua Hong Semiconductor announced that it will use the funds secured from this listing to expand the production capacity of its factory in Wuxi, Jiangsu Province. Stuart Randall, an analyst at consulting firm Intralinx, analyzed, "Hua Hong is seeking funding options other than government support in a highly capital-intensive industry," adding, "This will help expand mature process production capacity."

Chinese semiconductor companies, including Hua Hong Semiconductor, are actively listing to secure funds in the market based on strong government support. China's national semiconductor fund, the National Integrated Circuit Industry Investment Fund (commonly known as the Big Fund), purchased about 3 billion yuan worth of Hua Hong Semiconductor shares. SMIC, China's largest foundry company, also listed in July 2020, raising 53.2 billion yuan.

This is not Hua Hong Semiconductor's first listing. Hua Hong Semiconductor has also been listed and traded in Hong Kong since 2014. Due to the impact of the Shanghai Stock Exchange listing, Hua Hong Semiconductor's stock price fell by about 7% in the Hong Kong market on the same day.

This content was produced with the assistance of AI translation services.