Top China Chipmaker SMIC More than Triples in Shanghai Debut

(Bloomberg) -- Semiconductor Manufacturing International Corp. surged more than 200% during its Shanghai debut following a stock offering that is set to be China’s largest in a decade.

The Shanghai-based chipmaker climbed to 82.92 yuan on its first day of trading in the Shanghai Stock Exchange’s STAR market after initially selling shares at 27.46 yuan apiece. SMIC will raise as much as 53.2 billion yuan ($7.6 billion) if it fully exercises a greenshoe option, which would make it the largest mainland stock sale since Agricultural Bank of China Ltd.’s 68.5 billion yuan Shanghai initial public offering in 2010.

SMIC’s mainland listing comes amid intensifying competition between the U.S. and China for global tech supremacy. As the country’s No.1 contract manufacturer of chipsets, SMIC plays an important role in Beijing’s ambitions of becoming self-sufficient in semiconductor production following efforts by the Trump administration to curtail access by Chinese companies to key components.

Proceeds from the share sale will be used to develop next-generation chipmaking technologies as SMIC seeks to catch up to rivals like Taiwan Semiconductor Manufacturing Co., which makes chips for Apple Inc. and Huawei Technologies Co.’s most advanced smartphone models. TSMC, the world’s largest contract chipmaker, is ready to commercialize 5 nanometer technology, two generations ahead of SMIC’s capabilities.

China Integrated Circuit Industry Investment Fund, Singapore’s sovereign fund GIC Pte and the Abu Dhabi Investment Authority are among institutional investors that participated in SMIC’s share offering.

SMIC’s shares in Hong Kong fell 22% Thursday, the biggest drop since its listing in 2004. Those shares had tripled this year in anticipation of the Shanghai listing.

“SMIC has surged multiple times over a short period of time,” Kenny Wen, strategist with Everbright Sun Hung Kai Co., said by phone. “We see investors rush to profit-taking once the listing is completed.”

©2020 Bloomberg L.P.

With assistance from Bloomberg