Lontium Semiconductor Corp announces plans of going public in mainland China, which could test the new export controls that have put the fate of many US executives at Chinese chip firms in trouble, as reported by South China Morning Post.
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US President Joe Biden delivers remarks on lowering costs and creating jobs in the Hudson Valley, at IBM in Poughkeepsie, New York, on October 6, 2022. - IBM hosted US President Joe Biden Thursday to celebrate the announcement of a $20-billion investment in semiconductors, quantum computing and other cutting-edge technology in New York state.
The company recently gained approval for an initial public offering on Shanghai Stock Exchange's tech board, Star Market. The country has already invested a significant amount of money to support the development of their semiconductor industry.
Although companies going public in the country is common, what makes this different this time around is that Lontium Semiconductor Corp is owned by a former Intel engineer, Chen Feng, who is a US citizen, that could make the company's listing the first to test Washington's new rules, which is to "restrict the ability of US persons to support the development of production" of chips at Chinese semiconductor firms.
US-China Tech Trade War
The US has been frustrated by China's making huge investments in the semiconductor industry, which could help it build the next generation of military technology that the US cannot access. But now the government plans to block the investment of US citizens in Chinese chip companies and vice versa.
This is a win for Intel and Qualcomm, one of the biggest American chip firms that have taken a hit from Chinese competition. The creation of this policy also comes after China cut off the supply of rare earth metals and other material to many US firms. The US is hoping that the new policy will help slow China's progress in the semiconductor industry.
One way the government is trying to do this is by making it harder for Chinese firms to get funding. But in order to support US chip firms, the government must provide an alternative source of funding. Such alternatives are not readily available. And this could result in more deals going public in China.
For example, Lontium Semiconductor Corp could gain the backing of the Chinese government. Also, the new policy is not the only reason why companies such as Lontium Semiconductor Corp are going public in China.
Other reasons include the country's booming semiconductor market and tax incentives for tech companies. Therefore, it is unclear whether the new policy will help boost the prospects of US companies in China.
All eyes are on the upcoming initial public offering of Lontium Semiconductor. This could test the resolution of the US government. If it allows the listing to go forward, it will show that Washington is serious about controlling the flow of US technology to China.
If the US government blocks the deal, it will show that Washington's policies are in fact not as tough as people believe. This would make it harder for Washington to negotiate with Beijing over the control of technology in the future.
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Written by April Fowell
