On February 18, in the Beijing Economic and Technological Development Zone, the staff of SMIC’s production plant were operating equipment.Xinhua News Agency
Reference News Network reported on July 8 that Chinese companies hoping to localize semiconductors are rapidly expanding their financing scale. China is making every effort to increase its semiconductor self-sufficiency rate.
According to the “Nihon Keizai Shimbun” report on July 7, China’s semiconductor self-sufficiency rate is only a little more than 10%, while smartphones and equipment for the next-generation communication network 5G, which occupy a relatively high share of the global market, make China have a great international influence. If the United States drives China out of the semiconductor market in order to contain China’s rise in the high-tech field, then China will not only encounter difficulties in the production of the above-mentioned products, but may also be at a disadvantage in the hegemony competition between China and the United States.
Nihon Keizai Shimbun counted the amount of stock financing of semiconductor-related companies based on Chinese private database data, corporate announcements and media reports. The financing amount as of July 5 in 2020 reached 144 billion yuan, which greatly exceeded the financing amount for the whole year of 2019 (about 64 billion yuan) in about half a year.
The report believes that the reason is that the “chip war” initiated by the United States has made the Chinese government feel a sense of crisis. Chinese telecommunications equipment company ZTE was hit in 2018 by the embargo imposed by the Trump administration in the United States. Huawei Technologies is also having trouble procuring the most advanced semiconductors, making it difficult to import some of its semiconductor manufacturing equipment.
According to the report, China’s central and local governments have successively set up semiconductor funds aimed at realizing the localization of semiconductors and began to invest in Chinese companies.
In 2014, China established a government-sponsored semiconductor fund, the National Integrated Circuit Industry Investment Fund, and by 2019, it has completed an investment of 140 billion yuan. In the autumn of 2019, the second phase of the National Integrated Circuit Industry Investment Fund was established, and investment will begin in 2020. Shanghai and Beijing have also set up funds, and the central and local governments are joining forces to support the localization of semiconductors.
A representative example is Semiconductor Manufacturing International Corporation, a large Chinese semiconductor foundry, the report said. SMIC listed on the Science and Technology Innovation Board this month, which may raise 50 billion yuan. The company also received US$2.25 billion in financing (US$1 is approximately RMB 7.03 – Note on this website).
The American Integrated Circuit Research Corporation predicts that China’s semiconductor self-sufficiency rate will reach more than 20% by 2024. The company’s data also shows that as of December 2019, Taiwan, South Korea, and Japan ranked the top three in the world in terms of semiconductor production capacity, and mainland China ranked fourth, but surpassed the United States. Mainland China is expected to rank third in 2020 and second in 2022.
According to a report by the US Consumer News and Business Channel website on July 7, China’s large-scale chip manufacturer SMIC launched a stock offering worth 46.28 billion yuan on the 7th.
That’s more than double the company’s original funding goal. SMIC’s Hong Kong-listed shares surged as investor excitement grew ahead of SMIC’s Shanghai listing. In fact, the company’s Hong Kong shares have risen about 26% in the past five days and have risen more than 200% so far this year.
SMIC is believed to be a key player in China’s ambitious attempt to increase its chip self-sufficiency, the report said. This round of financing could help SMIC catch up to rivals TSMC and South Korea’s Samsung Electronics.
SMIC will initially issue 1,685.62 million shares at a price of 27.46 yuan per share. If demand is high, the underwriters can increase the total number of shares on issue to 1,938.463 million. If the over-allotment option is exercised in full, SMIC may raise 53.23 billion yuan.
According to the report, data from the American company DiRocky showed that the stock offering was the largest in mainland China in 10 years.