Credit: Visual China

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BEIJING, August 7 (TiPost) -- Hua Hong Semiconductor Limited (“Hua Hong Semiconductor”, stock code: 1347.HK), the second largest chip maker in Chinese mainland, was listed on the Shanghai Science and Technology Innovation Board (STAR Market) on Monday morning.

The company’s stock code is 688347, with the issue price at 52.00 RMB per share, significantly higher than its Hong Kong stock price. It opened at 58.88 RMB per share, 13% higher than the issue price.

According to the issuance announcement, the total amount raised by Hua Hong Semiconductor’s STAR Market IPO reached 21.2 billion yuan, exceeding the planned fundraising amount of 18 billion yuan, making it the largest IPO on the STAR Market and A-share market so far this year, and the third-largest IPO in the history of the STAR Market.

According to IC Insights’ 2021 annual global semiconductor foundry industry revenue ranking data, Hua Hong Semiconductor is the second-largest in Chinese mainland, second only to SMIC, and the world’s sixth-largest semiconductor foundry.

As of the end of 2022, the company had a total of four wafer fabs. Additionally, it announced the establishment of Hua Hong Manufacturing Company this year, which will add a new production line in Wuxi, a city in southeastern China’s Jiangsu province.

According to the prospectus, in the fiscal years 2020 to 2022, Hua Hong Semiconductor’s revenue was 6.74 billion RMB, 10.63 billion RMB, and 16.79 billion RMB, respectively, with a compound annual growth rate of 58.44%.

In the first quarter of 2023, the company’s revenue was 4.37 billion RMB, a year-on-year increase of 14.9%, falling short of the previous expectation of 630 million U.S. dollars.

Regarding production capacity, from 2020 to 2022, the company’s 8-inch wafer capacity was 2.49 million wafers, 3.26 million wafers, and 3.86 million wafers, with a compound annual growth rate of 24.67%.

Hua Hong Semiconductor currently faces two challenges. First, its business growth continues to slow down, and its automotive semiconductor business segment fail to offset the shrinking consumer electronics business. Second, there are issues related to technology gaps in the manufacturing process nodes and the potential impact of U.S. export controls on mature domestic (28nm) chips.

The company expects its revenue in the first half of 2023 to be around 8.5 billion yuan to 8.72 billion yuan, with year-on-year growth rates of 7.19% to 9.96% respectively; the net profit attributable to shareholders after deducting non-recurring gains and losses is estimated to be 1.15 billion to 1.65 billion yuan, with year-on-year growth rates of 2.93% to 47.69%, respectively.

According to the prospectus, the Shanghai State-owned Assets Supervision and Administration Commission directly holds 51.59% of the equity of Hua Hong Group and indirectly holds 100% of Hua Hong International’s shares, making it the actual controller of Hua Hong Semiconductor.

As of now, there are over 101 semiconductor and integrated circuit companies listed on the STAR Market, with a total market value of over 1.3 trillion yuan, accounting for about 20% of the total market value of the STAR Market.

(Note: 1 U.S. dollars equals 7.2 yuan.)