Visitors visit the stand of Huahong Group at an exhibition in Shanghai, China, June 15, 2023. On August 7, 2023, Huahong Group, the world’s sixth largest foundry semiconductor manufacturer, officially landed on the A-share science and technology innovation board, and the opening price rose by more than 13% on the first day. (Photo by Costfoto/NurPhoto via Getty Images)
Costfoto | Nurphoto | Getty Images
Shares of Chinese chipmaker Hua Hong surged 13% during its market debut on the Shanghai Stock Exchange’s Star Market. However, the gains were quickly relinquished.
Hua Hong is the second-largest chip foundry in China, coming after Semiconductor Manufacturing International Corp (SMIC).
According to Refinitiv data, the chipmaker’s shares opened at 58.88 Chinese yuan, marking a 13.2% increase from its offer price of 52 Chinese yuan ($7.23).
Despite the initial surge, the Shanghai-listed shares later declined and were trading at 53.99 Chinese yuan on Monday afternoon.
Prior to its debut, Hua Hong announced the sale of 407.75 million shares at a price of 52 Chinese yuan per share, as revealed in a filing.
The IPO of Hua Hong raised 21.2 billion yuan ($2.95 billion), making it the largest initial public offering in mainland China this year.
Hua Hong’s semiconductor chips are widely 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. However, its Hong Kong-listed shares experienced a 7.4% decline on Monday.
Phelix Lee, equity analyst at Morningstar Asia, downplayed the significance of Hua Hong’s IPO size, stating that it is smaller compared to SMIC’s IPO a few years ago. Lee expressed confidence in the trend of local chipmakers and related companies listing domestically, predicting that more semiconductor IPOs will follow.
SMIC raised 46.28 billion yuan ($6.62 billion) during its IPO in 2020.
Hua Hong’s listing coincides with Chinese companies’ efforts to secure capital for the development of advanced chip technology. This move aligns with China’s goal of attaining self-reliance in advanced chip tech amidst US efforts to restrict China’s access to such technology.
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