China's chip-making giant SMIC, which recently partnered with bitcoin miner maker Canaan, files for $2.8 billion IPO

Semiconductor Manufacturing International Corporation (SMIC), China’s largest computing chip maker, has officially filed for an initial public offering (IPO).

The company plans to raise 20 billion yuan (~$2.8 billion) by listing its shares on the Science and Technology Innovation Board of the Shanghai Stock Exchange — the SSE STAR Market. SMIC is already listed on the Hong Kong Stock Exchange. 

SMIC’s IPO filing comes amid rising trade tensions between China and the U.S. On May 15, the U.S. Department of Commerce imposed new restrictions on Chinese tech giant Huawei. Under the new rules, all non-U.S. chip manufacturers using American technology will have to apply for a license before shipping chips to Huawei.

The restrictions have not only affected Huawei, but also its largest chip supplier Taiwan Semiconductor Manufacturing Company (TSMC), which has halted new orders from Huawei. Notably, the U.S. controls came the same day TSMC announced its plans to set up a $12 billion plant in the Arizona state.

Also on the same day, Chinese state investors injected $2.2 billion in TSMC rival SMIC. SMIC is now looking to raise more funds via the IPO to increase its tech and production capabilities.

While SMIC is looking to compete with TSMC, the former is far behind the latter in terms of technology, according to market analysts. SMIC is still on 14-nanometer (nm) process chips, and TSMC is expected to move onto a more advanced 5nm chips this year.

Canaan partnership 

Notably, SMIC is also developing 14 nm chips for Canaan, as part of their recent partnership.

According to crypto mining expert Kristy-Leigh Minehan, SMIC has “years to catch up” with TSMC, which is Bitmain’s major chip supplier. However, she expects SMIC to emerge as a domestic alternative to TSMC and Samsung, and “provide a strong surge of ASICs [application-specific integrated circuit chips] for the altcoin market.”

“I expect to see an ASIC for almost every coin out there — regardless of market cap,” said Leigh Minehan. “In China, the demand for altcoins is ridiculously high.”

Overall, she said she expects SMIC’s IPO to “succeed with flying colors” because China needs a next-generation fabrication facility that can serve foreign markets.

Leigh Minehan also expects to see more partnerships with SMIC, a Huawei or SMIC-powered phone that is compatible with China’s digital currency, as well as more altcoin ASICs.