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[Manufacturing/Package Testing] SMIC Submits Registration on the STAR Market
Release Time:
Jun 23,2020
On June 22, according to the official website of the Shanghai Stock Exchange, SMIC has submitted its registration application for the STAR Market. It is understood that in the process of entering the STAR Market, SMIC has been breaking STAR Market records—both in terms of timing and the amount of funds to be raised.
In terms of timing, SMIC issued an announcement on May 5, officially declaring its entry into the STAR Market; on May 7, the Beijing Securities Regulatory Bureau disclosed SMIC’s guidance filing information, marking SMIC’s commencement of its IPO guidance period; on June 1, Shanghai Stock Exchange data showed that SMIC’s STAR Market listing application had been accepted, officially clearing the hurdle to list on the STAR Market; on June 4, SMIC completed the inquiry process for its STAR Market offering; and on June 19, SMIC successfully passed the review for its STAR Market listing.
In terms of fundraising amount, SMIC plans to raise 20 billion yuan on the STAR Market, making it the largest financing deal to date on the exchange.
It is reported that SMIC plans to allocate the net proceeds from this offering—after deducting issuance expenses—to the 12‑inch chip SN1 project, R&D reserves for advanced and mature process technologies, and the replenishment of working capital.
Among them, the SN1 12‑inch chip project is slated to receive 8.00 billion yuan in raised funds. The project will be carried out by SMIC South, utilizing process technology at 14 nm and below. It is China’s first FinFET production line and also serves as the primary platform for SMIC’s R&D and mass production of advanced processes at 14 nm and below. The project is planned to have a monthly production capacity of 35,000 wafers; currently, a monthly capacity of 6,000 wafers has been established. The raised funds will primarily be used to cover part of the capital requirements needed to expand the production line’s monthly capacity to 35,000 wafers.
SMIC stated that the implementation of this project will significantly enhance the process technology level of integrated circuit wafer fabrication in mainland China, strengthen the company’s ability to provide high‑end chip manufacturing services to global customers, and further drive the development of the integrated circuit industry in mainland China.
The proposed investment from the raised funds for the advanced and mature process R&D project reserve is 4.00 billion yuan, which is planned to be used for the R&D of advanced processes at 14 nm and below, as well as mature processes at 28 nm and above.
SMIC stated that continuing to refine its 14nm process and advancing R&D on processes below 14nm is of great significance for further maintaining and enhancing the company’s technological leadership in the field of IC foundry services in mainland China; meanwhile, R&D on mature processes at 28nm and above will help strengthen the company’s ability to adapt to market changes and further consolidate and elevate its market competitiveness in the IC foundry sector for mature-process wafers.
While meeting the funding requirements for the aforementioned projects, the funds raised from this issuance are also intended to be used, to the extent of RMB 8.00 billion, to replenish working capital, thereby reducing the company’s asset‑liability ratio, lowering its financial leverage, and optimizing its capital structure to meet the working capital needs arising from the company’s operational development.
Cover image source: Paixin.com
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