Semiconductor Manufacturing International Corporation’s (SMIC) listing in Shanghai could raise it as much as $7.5 billion. This huge investment aims the company to catch up with its global competitors.
China’s SMIC said last week that it wants to raise at least $6.6 billion. However, the company expects an increase if it has an “over-allotment option” and issues extra shares to accommodate strong demands.
The $7.5 billion raise makes SMIC’s offering the world’s third-biggest share sale this year. It is also the biggest offering in China since 2010 when the Agricultural Bank went public.
As the largest chipmaker in China, SMIC posted revenue of $3.1 billion in 2019. In terms of sales, the Chinese company is also the world’s fourth-largest standalone chipmaker in 2018. The largest three are Taiwan Semiconductor Manufacturing Co. (TSMC), GlobalFoundries, and United Microelectronics Corporation.
A listing in Shanghai suggests that SMIC thinks it can best grow by relying on Chinese investors. Since the listing in china, SMIC has raised over $2 billion from state-backed development funds. Also, over a year ago, the New York Stock Exchange has removed the company from the listing due to low trading volume.
China imports most of its chipsets for smartphones, computers, and telecommunications equipment. In 2019, the country imported $306 billion worth of chips in total. This number represents 15 percent of the country’s total imports.
China is eyeing to match the chipmaking technology of the industry’s most advanced leaders by 2030. This is also a cold-war strategy in case America is banning more products to sell for China.