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Hua Hong semiconductor raises $3 billion in China’s biggest IPO of 2023

Hua Hong Semiconductor, China’s second-largest chip foundry, posted modest gains in its Shanghai debut on Monday, reflecting a weak market sentiment and investor caution amid mounting Sino-U.S. chip rivalry.

Hua Hong shares opened 13% higher on Shanghai’s tech-focused STAR Market, but quickly faltered.

As of 0225 GMT, the stock was changing hands at 54.6 yuan ($7.60), just 5% higher than its offer price of 52 yuan. The Shanghai Composite Index was down 0.6%, while Hua Hong’s Hong Kong-listed shares declined more than 7%.

Hua Hong raised $3 billion in China’s biggest public offering this year, joining a long queue of local chipmakers to tap the stock market to fund expansion as Beijing seeks self-sufficiency in an escalating technology war with Washington.

U.S.-China tensions over semiconductors began with the Trump administration’s trade war and have ratcheted up under President Joe Biden’s leadership as Washington looks to undercut Beijing’s efforts to build its high-tech industry.

“It’s another source of funds for Hua Hong in an industry with famously high capital expenditure requirements,” Stewart Randall, a Shanghai-based chip analyst at consultancy Intralink, said about Hua Rong’s share sale. “It will help it expand its mature node capacity, which is a focus for China right now.”

Randall said the money raised by Hua Hong is not huge in a capital-intensive industry, but shows chipmakers are broadening fundraising channels in addition to government backing.

Hua Hong will use most of the proceeds to boost capacity at a facility in Wuxi, in eastern Jiangsu province, according to the company’s prospectus. Reuters

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