Chinese Chipmaker Hua Hong Makes Market Debut with Mixed Results
Shares of Chinese chipmaker Hua Hong soared by 13% at the start of its market debut on the Shanghai Stock Exchange’s Star Market on Monday. However, the gains were short-lived as the stock quickly retreated.
Hua Hong, China’s second-largest chip foundry after Semiconductor Manufacturing International Corp (SMIC), had the largest initial public offering (IPO) in Mainland China this year, as reported by EY’s global IPO report.
The chipmaker’s shares opened at 58.88 Chinese yuan on the Nasdaq-style Star Market, a 13.2% increase from its offer price of 52 Chinese yuan ($7.23), according to Refinitiv data. However, the stock later declined and was trading at 53.99 Chinese yuan on Monday afternoon.
Hua Hong, based in Shanghai, produces semiconductors using advanced wafer process technologies. The company sold 407.75 million shares at a price of 52 Chinese yuan per share, raising 21.2 billion yuan ($2.95 billion), according to a filing.
The chips manufactured by Hua Hong are used in various industries, including consumer electronics, communications, computing, industrial, and automotive sectors.
Hua Hong has been listed on the Hong Kong exchange since 2014. Its Hong Kong-listed shares dropped by as much as 7.4% on Monday.
Phelix Lee, an equity analyst at Morningstar Asia, downplayed the significance of Hua Hong’s IPO size, stating that it is smaller than SMIC’s IPO from a few years ago. Lee expressed confidence in the trend of encouraging domestic chipmakers and related companies to list domestically, predicting more semiconductor IPOs in the future.
In 2020, SMIC raised 46.28 billion yuan ($6.62 billion) during its IPO.
Hua Hong’s listing comes at a time when Chinese companies are seeking capital to enhance their advanced chip technology capabilities, aiming for self-reliance in the face of Washington’s efforts to restrict China’s access to such technology.
