China is determined to protect the development of its semiconductor industry at all costs. As expected. The sanctions imposed by the US-led alliance do not make it easy for them because they prevent them from accessing the most advanced lithography equipment available today: the extreme ultraviolet and deep ultraviolet machines that ASML manufactures. Even so, this highly populated Asian country is taking firm steps forward with the intention of protect their semiconductor manufacturers.
One of its most important companies in this industry is Hua Hong Semiconductor, but its crown jewel, and of this there is not the slightest doubt, is the partially public company SMIC (Semiconductor Manufacturing International Corporation). This manufacturer of integrated circuits currently has a global market share of approximately 5%, which allows it to step on the heels of the American GlobalFoundries and the Taiwanese UMC, both with 7%. Of course, it is far from the approximate 17% of Intel and Samsung, and even more than 54% of TSMC.
SMIC is behind one of the biggest public offerings of 2023
The real protagonist of this news is SMES (Semiconductor Manufacturing Electronics Shaoxing). This Chinese company is much less well known than the two that I mentioned in the second paragraph of this article, but it is a very relevant player in the semiconductor industry in this country. And it is for a crucial reason: its owners are SMIC and the Government of Shaoxing, a city-prefecture located in Zhejiang province.
To further develop their technology, Chinese companies competing in the chip market need to receive large injections of capital.
For all intents and purposes, like SMIC, SMES is a partly public company, and being backed by China’s largest IC maker clearly works in its favor. To strengthen themselves and continue developing their technology, Chinese companies that compete in the chip market need to receive large injections of capital, and the step that SMES has just taken pursues exactly that: to strengthen themselves by receiving a boost of 1.4 billion dollars that would also benefit from indirectly to one of its owners, SMIC.
To obtain this injection of capital, the owners of SMES have launched today a public offer for the purchase of shares in the STAR market of the Shanghai Stock Exchange, which is the Chinese answer to the American NASDAQ. If everything goes as planned by the owners of SMES and the company receives the financing it is looking for, this operation would be consolidated as second largest public offering purchase of shares in Asia so far this year behind only Nexchip Semiconductor, which has obtained 1,670 million dollars just a few days ago. These chip war moves are just getting started, so other Chinese companies are likely to follow in SMES’ footsteps soon.
Cover image: TSMC
More information: SCMP
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