Nexchip Files for $5B Hong Kong IPO Amid Chip Expansion

A major Chinese semiconductor foundry has taken a significant step toward a massive capital raise to fuel its expansion. Nexchip Semiconductor filed for an initial public offering on the Hong Kong Stock Exchange this week, aiming to secure billions in international investment. This move aligns with a broader trend of Chinese chip firms leveraging Hong Kong’s markets, as national policy prioritizes building a resilient domestic semiconductor supply chain less vulnerable to foreign export restrictions. Based in Hefei, Nexchip ranks as China’s third-largest foundry and plans a dual listing to complement its existing shares in Shanghai, seeking funds for an ambitious industrial scaling effort.

This financial push follows a key technological advancement. In early March, the company announced it had completed full-process development of a 28nm logic platform, marking a strategic move into more advanced manufacturing. While this node lags far behind the industry’s leading-edge 3nm and 5nm processes, it represents a major leap from Nexchip’s established 55nm to 150nm capabilities. This progression enables the company to target higher-value segments, including components for AI-enabled smartphones, smart vehicles, and advanced display panels, moving beyond its traditional focus on display drivers and image sensors.

The capital requirement is directly tied to concrete expansion plans. In January, Nexchip began construction on a Phase IV project in Hefei, a 35.5 billion yuan investment to establish a new 12-inch wafer production line. This facility is designed for a monthly capacity of 55,000 wafers at 40nm and 28nm nodes, with equipment installation slated for late this year. The project highlights the company’s rapid growth trajectory, which is already evident in its financials. Nexchip reported 2025 revenue of 10.89 billion yuan, a 17.7 percent annual increase, with net profit climbing 32 percent. Industry analysts predict it will soon ascend in the global foundry rankings, a rise supported by both commercial success and China’s subsidized chip ecosystem.

The company’s origins reveal a strategic partnership that has evolved into competition. Founded in 2015 as a joint venture between a Hefei state-owned entity and Taiwan’s Powerchip Technology, Nexchip leveraged Taiwanese technical expertise with local capital and political support. It has since grown into an independent force, with the Hefei government remaining the controlling shareholder. Its IPO filing is part of a larger wave reshaping Hong Kong’s exchange, as Chinese AI and semiconductor firms seek international capital to build domestic alternatives amid trade restrictions. Recent successful debuts by companies like Biren Technology underscore the market’s appetite.

Nexchip’s focus on mature-node manufacturing is central to China’s current semiconductor strategy. With access to extreme ultraviolet lithography equipment blocked, Chinese foundries are concentrating investment on the 28nm-and-above processes critical for automotive, industrial, and consumer electronics. Industry data indicates over half of all new global capacity at these nodes is being built in China, with its foundries projected to hold more than a quarter of the world’s top-tier mature-node capacity.

Market dynamics validate this approach. Following similar moves by rivals SMIC and Hua Hong, Nexchip recently announced a 10 percent increase in its foundry fees, citing geopolitical and supply chain pressures. The company also plans to shutter two older fabrication facilities by 2027, a decision that will further tighten eight-inch wafer supply and support firm pricing across a constrained sector. This environment is driving consolidation, as seen in SMIC’s and Hua Hong’s recent multi-billion-dollar acquisitions to bolster scale, signaling a sector preparing for sustained growth as AI integration spreads.

For Nexchip, the Phase IV expansion is a calculated bet that its transition to 28nm production will align with the next demand wave. Its existing client roster, which includes sensor designer SmartSens and Xiaomi, is poised to broaden as the new platform attracts customers building more complex AI products. While the $5.1 billion expansion represents a substantial commitment for a company of its current revenue size, the Hong Kong listing signifies more than a single firm’s financing need. It demonstrates a phase of deliberate acceleration in China’s mature-node chipmaking ambitions, funded through global markets and driven by a resolve to dominate production in the foundational semiconductors the global economy requires.