China's chip maker to raise billions amid US export curbs

Chinese chip manufacturer Hua Hong Semiconductor has received regulatory approval for an 18 billion yuan ($2.5 billion) IPO in Shanghai, according to a Hong Kong stock exchange filing. 

The planned initial public offering (IPO) comes as China’s chip companies gear up for steeper competition with the United States due to geopolitical tensions.

US President Joe Biden last month introduced unprecedented export curbs aimed at stopping Beijing from acquiring advanced semiconductor technology. 

New rules bar American citizens, residents and green-card holders from working with China's chip makers. 

READ MORE: Chip wars: How US short-circuited China’s semiconductor ambitions

Hua Hong says it intends to use the money to invest in a new fabrication plant – or fab – in the eastern city of Wuxi, with construction set to begin in 2023 and an eventual production capacity of 83,000 wafers per month.

The company currently has four fabs in total – three 8-inch fabs in Shanghai, and one 12-inch fab in Wuxi currently expanding to 95,000 wafers per month. 

The proceeds from the IPO will also go to upgrading the latter fab, according to its prospectus.

Hua Hong’s Shanghai IPO will follow that of China’s Semiconductor Manufacturing International Corp (SMIC), China largest chip manufacturer. 

READ MORE: SMIC: The Chinese company at the centre of US-China chip war

Washington has barred US-based equipment makers from selling tools to Chinese foundries for production of logic chips produced at 14-nanometers and below.

Hua Hong specialises in mature technology, and generates most of its revenue making chips using 55-nanometer process technology. 

The company has a global market share of 3.2 percent of the foundry business, according to research firm TrendForce.