Thousands of China-based semiconductor companies have recently gone out of business, and numerous IPO processes have been halted. Chinese authorities now encourage mergers and acquisitions (M&As) over initial public offerings (IPOs) to build stronger, larger entities. The aim is to concentrate resources on technological advancements by creating robust companies rather than numerous weaker ones.
New laws, such as the STAR Market Eight Provisions, have been introduced to support M&As for tech companies. The China Securities Regulatory Commission intends to foster an environment favorable to tech companies with critical technological capabilities. The government’s goal is for promising tech enterprises to receive the necessary support without relying on IPOs. The STAR Market Eight Provisions, introduced in June, encourage M&A for tech firms, even if they are currently unprofitable. Mechanisms are being put in place to identify and support enterprises with promising technologies. This effort is part of a broader initiative to consolidate the semiconductor industry and focus on technological advancement.
China’s securities regulator has increased efforts to crack down on financial misconduct, allowing only high-quality firms to go public. As a result, there has been a surge in IPO terminations and the delisting of existing companies. In the first half of the year, 36 semiconductor companies canceled their IPO reviews, involving a planned fundraising amount of around $5.8 billion.
