Semiconductors and China: In response to US sanctions, companies seek capital on the market, with the help of the government
China's semiconductor industry, hit by the sanctions, is poised to receive a much-needed lifeline through capital raised by new public listings and mutual funds, according to the latest stock market and financing data, while Beijing doubles down on push for country's self-sufficiency in chips amid tougher US trade restrictions.
Initial public offering (IPO) requests from nine semiconductor supply chain companies in China were approved this month, including six integrated circuit (IC) design companies, a chip packaging company, a wafers and a supplier of packaging materials, according to national stock exchange filings. These IPOs are expected to raise a total of 21.6 billion yuan ($3 billion) from investors.
The silicon wafer maker that is about to go public is Semiconductor Manufacturing Electronics (Shaoxing) Corp, a subsidiary of the country's largest and most advanced chip maker, Semiconductor Manufacturing International Corp (SMIC). Only seven chip-related IPOs were approved in the same month last year.
The latest IPO approvals come after Hong Kong-listed and China's second largest chipmaker Hua Hong Semiconductor received the green light earlier this month for its $2.5 billion listing on the Science and Technology Innovation Board of Shanghai, also known as Star Market.
“These IPO activity has been steady in transaction size over the past few quarters, and more is on the way,” said Gary Ng, senior economist for Asia-Pacific at French investment bank Natixis. "More IPOs will allow Chinese chipmakers to easily access capital and deploy more resources for research and development." Ng indicated that research and development in the sector will involve "a complicated and lengthy process, but it is important to counter US restrictions".
In the first 11 months of this year, 46 semiconductor-related companies involved in design, manufacturing, components and materials were listed on the Star Market, compared to 19 companies in the same period a year earlier, according to the Chinese service. of Qichacha company data.
A capital boost is also being raised by Chinese fund management companies, which have launched several semiconductor-related funds to funnel retail investor money into chip stocks.
ICBC Credit Suisse Asset Management – a joint venture between the state-owned Industrial and Commercial Bank of China, the world's largest commercial lender by assets, and 166-year-old Swiss investment bank Credit Suisse – launched a new fund last week which benchmarks the Chinese mainland chip stock index.
All of these new investment inflows reflect an opportunity for China's semiconductor industry to cope with the latest US trade restrictions and Washington's increased control over companies that are part of the country's chip supply chain.
On Oct. 7, the Bureau of Industry and Security (BIS), an agency of the US Department of Commerce, rolled out updates that further limit China's ability to obtain advanced computing chips, develop and maintain supercomputers, and produce advanced semiconductors. used in military applications, including weapons of mass destruction.
This followed Washington's directive in September that prevented Nvidia and Advanced Micro Devices from supplying their cutting-edge chips to customers in China. In August, the Biden administration enacted the Chips and Science Act to boost integrated circuit manufacturing capabilities in America.
Since the U.S. chip ban, China's secondary capital market for semiconductor companies has been driven by "patriotism" and potential government support…rather than the near-term tech cycle," he said. said Ng, an economist at Natixis. He cited shares of dual-listed company SMIC as an example, which fell 0.9% in Hong Kong but gained 8% in Shanghai since early October. But there is a problem at the level of the technology sector index: the Star Market chip index (China's NASDAQ), which includes the 50 largest semiconductor companies in the country, fell 27% year on year to November 24, according to data from the state-owned company Chin
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The article Semiconductors and China: in response to US sanctions companies seek capital on the market, with the help of the government comes from Scenari Economici .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/semiconduttori-e-cina-in-risposta-alle-sanzioni-usa-le-societa-cercano-capitali-sul-mercato-con-laiuto-del-governo/ on Sun, 27 Nov 2022 11:03:56 +0000.