China Boosts US Sanctions-Hit Chip Sector With New Funding

According to the most recent stock market filings and financing data, China’s sanctions-hit chips sector will be financially boosted by new public listings and mutual funds as Beijing intensifies the nation’s chip independence amid US trade restrictions. 

SCMP reports that local stock market records show that nine Chinese businesses in the semiconductor circuit supply chain – such as six IC design companies, a chip packaging company, a wafer foundry, and others -have had their initial public offering (IPO) applications approved this month. 

(Photo : STR/AFP via Getty Images)
An employee works at a factory of Jiejie Semiconductor Company in Nantong, in eastern China’s Jiangsu province on March 17, 2021.

Soon to be Public

Investors are anticipated to contribute a total of 21.6 billion yuan (about $3 billion) to these IPOs, according to SCMP. 

Semiconductor Manufacturing Electronics (Shaoxing) Corp, a subsidiary of Semiconductor Manufacturing International Corp (SMIC) and the nation’s largest and most technologically advanced chip manufacturer, is the wafer foundry that will soon go public on the mainland. 

SCMP noted that only seven chip-related IPOs were authorized in the same month a year ago. 

The most recent IPO approvals follow closely on the heels of Hua Hong Semiconductor, the second-largest chip manufacturer in China and a Hong Kong-listed company, receiving approval this month to list for US$2.5 billion on Shanghai’s Science and Technology Innovation Board, or the Star Market.

According to Chinese corporate data agency Qichacha, 46 semiconductor-related companies related to fabrication, components, and design have gone public on the Star Market during the first eleven months of 200 – a significant increase from last year’s 19.

Chinese fund management companies, which have started a number of semiconductor-related funds to direct the money of individual investors into chip equities, are also raising more money. 

The state-owned Industrial and Commercial Bank of China, the largest commercial lender in the world by assets, and the 166-year-old Swiss investment bank Credit Suisse recently created a new fund for the mainland’s chip stock index. 

All of these new investment inputs offer a chance for China’s semiconductor industry to adapt to the most recent US trade restrictions and prevent dismal growth in the sector.

Read also: China’s Semiconductor Industry Sees Huge Demand in Chip Industry for 2024: Here’s What The Nation is Doing to Solve It 

US Chip Sanctions

On October 7, updates were implemented by the Bureau of Industry and Security (BIS), a division of the US Department of Commerce, limiting China’s access to supercomputers, advanced semiconductors, and computing chips that could be utilized for military purposes. 

Washington added 31 Chinese IT companies, research institutions, and affiliated entities to the US Unverified List.  

The list functions as a trade restriction, and everyone included will be unable to receive items subject to the US government’s Export Administration Regulations. 

Related Article: US-China Tech War: ASML, Lam Research Pulls American Engineers From China Amid New Chip Restrictions 

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Written by Jace Dela Cruz

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