Monday, June 8, 2020
Many China's major semiconductor firms are rushing to raise funds from the Sci-Tech Innovation Board of the Shanghai Stock Exchange (SSE) to support their development of advanced chips design and manufacturing technologies, but they are likely to become new targets for trade sanctions by the US once they grow fast to threaten American suppliers or become able to control Chinese semiconductor sector, according to Taiwan semiconductor supply chain sources.
The US will, starting September, impose a new rule blocking global companies from using American-made technology or software to design or manufacture chips for Huawei and its affiliates to thwart China's 5G development and hinder China from building its own integrated IC supply chain. As a result, not only Huawei's handset sales will shrink significantly, but also China's 5G infrastructure construction will hit snags, the sources said.
China has yet worked out concrete strategic measures to fight back, but the only way the country can take now is to accelerate its semiconductor self-sufficiency efforts. Besides financial support from the China National IC Industry Investment Fund (Big Fund), the Sci-Tech Innovation Board has become a major fundraising source for Chinese semiconductor firms.
China's leading foundry house Semiconductor International Manufacturing (SMIC) has disclosed plans to launch an IPO at the board aiming to raise CNY 20 billion (US$2.81 billion), the highest figure of its kind for the board, partly to finance its development of 7nm EUV and more advanced manufacturing nodes.
But since SMIC still relies on US suppliers for EDA tools and key manufacturing equipment, the foundry has turned conservative toward handling contract production for Huawei's chips solutions or even developing advanced process nodes, the sources said.
Cambricon may replace Hisilicon in AI chips segment
China's top AI startup Cambrion Technologies will see its shares listed on the SSE tech board soon as it has almost completed related procedures. The company, expected to replace Huawei/Hisilicon in the AI chip segment, still significantly lags behind US chipmakers Intel, Qualcomm and Nvidia in technology R&D prowess, but it will have the potential of challenging the vendors with strong government financial and policy backing as well as huge domestic market demand.
But Cambricon had seen losses amount to over CNY1 billion during 2017-2019, and its first-half 2020 revenues from IP licensing to Hisilicon may drop significantly. Accordingly, whether the company can expand its business scale and turn profitable after getting listed on the SSE's innovation board remains to be seen, the sources noted.
China's major third-party vendor of mobile chipsets Unisoc Communications under Tsinghua Unigroup is also actively making listing preparations, and its IPO will become another focus of attention from stock investors and related industry sectors.
The company has got a capital injection of CNY2.25 billion from the Big Fund, and has also recently announced gaining new investment funds from Chongqing Liangjiang New Area Development & Investment Group, highlighting its ambition to speed up R&D on 5G mobile communication chips solutions.
Over the past year, SSE's tech board has seen the listing of more than 10 semiconductor firms, including MOSFET maker China Resources Microelectronics, equipment makers AMEC and Kingsemi, and IC designers Montage Technology and Amlogic, with their annual revenues ranging from CNY189 million to CNY5.743 billion in 2019.
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