Please ensure Javascript is enabled for purposes of website accessibility

Chinese Chipmaker Semiconductor Manufacturing International to Raise $2.8 Billion Via Shanghai Listing

By Donna Fuscaldo – Jun 2, 2020 at 11:50AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

SMIC anticipates increased business now that the U.S. has expanded the Foreign Direct Product Rule.

Semiconductor Manufacturing International Corp., China's biggest chipmaker, is aiming to raise $2.8 billion via a listing in Shanghai. 

In a prospectus made public this week, the chipmaker, which trades on the Hong Kong Exchange, said proceeds from the share sale will go to bankroll projects and shore up operating capital as tensions between the U.S. and China intensify. 

Made in China sign against a circuit board.

IMAGE SOURCE: GETTY IMAGES.

The company is anticipating increased business after the U.S. Department of Commerce in May expanded the Foreign Direct Product Rule to prevent Chinese smartphone maker Huawei from purchasing semiconductors from U.S. companies. The restrictions now cover semiconductor designs and chipsets, including ones outside of the U.S. that are made with U.S. equipment. Companies will need a license from the Commerce Department to work with Huawei.

Those expanded restrictions are expected to hurt Taiwan Semiconductor Manufacturing (TSM -2.33%) and potentially send more business SMIC's way. But with the tech stock behind TSMC from a technological standpoint, some of the funding may go to enhance its capabilities. SMIC listed the rule as a potential positive in the prospectus pointing out that some semiconductor equipment and technologies imported from the United States may not be used to manufacture products for a number of customers unless they obtain approval from the Department of Commerce. In response to the expanded rule, TSMC has agreed to build a $12 billion chip plant in Arizona. 

Last month SMIC raised $2.2 billion in funding from China state investors, raising its capital to $6.5 billion from $3.5 billion. 

Donna Fuscaldo has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Taiwan Semiconductor Manufacturing Company Limited Stock Quote
Taiwan Semiconductor Manufacturing Company Limited
TSM
$73.87 (-2.33%) $-1.76

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
329%
 
S&P 500 Returns
106%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/24/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.