Tech war: US mineral firm’s China unit faces fresh hurdle to Shanghai listing plan after Beijing’s metal export controls
- Beijing Tongmei Xtal Technology received initial approval for a STAR-board listing on the Shanghai Stock Exchange last July, but little progress has been made since then
- The firm foreshadowed troubles ahead in its prospectus last July, saying that a worsening Beijing-US relationship could have ‘profound negative implications’
The Chinese subsidiary of AXT, a US semiconductor wafer maker, faces fresh obstacles in its pursuit of an initial public offering (IPO) in Shanghai after China imposed export control measures on the critical chip-making materials of germanium and gallium.
Beijing Tongmei Xtal Technology Co, in which AXT holds a controlling 85.51 per cent share, received initial approval for a listing on the STAR board of the Shanghai Stock Exchange last July, but little progress has been made since then. The company did not immediately respond to a request for comment.
The stalled IPO confronted a new hurdle last week after Beijing said it would impose controls on exports of eight gallium products and six germanium products from August 1, to safeguard its national security and interests. Exports of these products accounted for about half of Beijing Tongmei’s total revenues, according to its financial statements.
According to the IPO plan, the company aimed to raise a total of 1.167 billion yuan (US$161.3 million), with more than 366 million yuan allocated for gallium arsenide projects, and more than 175 million yuan for research and development involving semiconductor materials.
While it remains uncertain how the new export control measures will impact its business, Beijing Tongmei foreshadowed troubles ahead in its prospectus last July, saying that a worsening Beijing-US relationship could have “profound negative implications” on the global semiconductor industry. If more tariffs or barriers were imposed, it would result in “increased production costs and decreased price competitiveness … and a significant impact on the company’s financial performance,” the company said at the time.
Gallium and germanium are crucial minor metals used in critical industrial sectors such as semiconductors, solar cells, and satellites. China accounts for more than 95 per cent of the global gallium output and about 60 per cent of germanium production.
