<article>Semiconductor equipment manufacturer Hwatsing Technology Co. Ltd. booked a blistering Shanghai STAR Market IPO debut on Wednesday amid a Covid-induced global shortage of microchips.</article>

Semiconductor equipment manufacturer Hwatsing Technology Co. Ltd. booked a blistering Shanghai STAR Market IPO debut on Wednesday amid a Covid-induced global shortage of microchips.
The Tianjin-based firm’s shares surged 72% in early trading but gave back some of those gains over the course of the day to close up 64% at 224.1 yuan ($33.5), valuing Hwatsing at about 23.9 billion yuan.
The strong landing contrasted with other chipmaking industry debuts which have slumped recently, such as ASR Microelectronics which dropped 33.75% on its first trading day in mid-January.
Investors who spoke to Caixin put that down to Hwatsing’s profitability, sound fundamentals, and its competitive edge in 12-inch wafer polishing.
The firm, which makes chemical-mechanical polishing (CMP) machines, raised about 3.6 billion yuan by issuing 26.7 million shares through the IPO. That’s more than three times its original target to raise 1 billion yuan. CMP machines are used to flatten a wafer’s front surface for adding the next layer of circuit features.
The proceeds will be earmarked for strengthening its R&amp;D capabilities, enhancing industrialization processes, investing in a wafer regeneration project and replenishing its working capital, Hwatsing said in its prospectus.
Since its inception in 2013, Hwatsing has sold more than 140 CMP machines to customers including Semiconductor Manufacturing International Corp., Yangtze Memory Technologies Co. Ltd. and Hua Hong Semiconductor Ltd., according to the prospectus, which noted orders for another 70 CMP machines.
In recent years, Hwatsing has steadily expanded its presence in the Chinese mainland’s CMP machine market, with its market share jumping to 12.6% in 2020 from just 1.1% in 2018, company data showed.
In the prospectus, Hwatsing acknowledged that it still has a long way to go to catch up with global market leaders because its products are mainly used for chipmaking enabled by old 28-nanometer (nm) technology. A product targeting 14-nm technology is still under verification, the company added.
By contrast, bigger rivals U.S.-based Applied Materials Inc. and Japan’s Ebara Corp., which jointly control more than 90% of the global market, have already developed CMP equipment used for manufacturing chips made with much more advanced 5-nm technology.
Hwatsing finished 2021 with a net profit of 198 million yuan on revenue of 800 million yuan. In 2020 and 2019, the company reported a net profit of 97.8 million yuan and a net loss of 154 million yuan, respectively, according to the prospectus.
Hwatsing predicts its net profit in the first half of this year to be between 140 million yuan and 180 billion yuan, representing a year-on-year increase of 98.5% to 155.2%.
After the IPO, Tsinghua Holdings Corp. Ltd. remains the single largest shareholder of Hwatsing with a 28.19% stake, while Chairman Lu Xinchun holds 5.95%.
This article was first published in <a href="https://www.caixinglobal.com/2022-06-09/chip-shortage-fans-investor-interest-in-semiconductor-equipment-firms-540-million-ipo-101897035.html">Caixin Global.</a>

The strong landing contrasted with other chipmaking industry debuts which have slumped recently, such as ASR Microelectronics.

Chip shortage fans interest in semiconductor equipment firm's $540m IPO

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