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How Intel Made a 528% Return on China’s New ‘Nasdaq’

China's new tech board soared 140% on its first day in a rally that created at least three new billionaires—but largely excluded foreign investors from its list of beneficiaries.

Yet U.S.-based chip-making giant Intel, Fortune has learned, became a major winner.

In particular, Intel's venture capital subsidiary Intel Capital, paid $175.1 million for what is now a 9% stake in a fellow chipmaker, Montage Technology, according to filings with the Shanghai Stock Exchange. That stake is now worth $1.1 billion after shares of the Shanghai-based company jumped 206% between its first day of trading and Wednesday, valuing the company around $12.5 billion—representing a return of 528% for Intel.

It's not the first time Montage has paid off for Intel. Prior to owning its current stake, Intel had bought shares in the company for an unspecified price, and later sold off its stake in Montage for about $44.4 million in cash. The first investment came during the Shanghai-based firm's Series B round in 2007. Intel sold a portion of that stake for $10 a share during Montage's IPO in 2013, netting about $2.5 million pre-expenses.

A year later, Intel was paid an estimated $41.9 million for its remaining stake in the company when Montage was taken private just over a year later by a consortium: Chinese government-backed Shanghai Pudong Science and Technology Investment Co., and China Electronics Corporation(the prices was $22.60 a share or $693 million for the whole company).

Intel, which will report earnings Thursday, declined to comment.

This being China, there are some restrictions, however. Under the terms of the new IPO on the STAR Market, Intel cannot sell its Montage stake for at least three years. And in the meantime, it's likely the stake will weather volatility that has come to define mainland Chinese equity markets.

The new bourse was created with the goal of luring large Chinese companies, who have often listed in the U.S. or elsewhere, into listing on the mainland. In the past decade, tech giants including Alibaba and Baidu, as well as companies like Luckin Coffee have chosen to list abroad either for more liquid markets, or because exchanges in the states allow IPOs by companies that are not yet profitable. While Alibaba and Baidu were profitable at its IPO, but Luckin was not.

STAR Market though has loosened some regulations. Some companies will be able to list on the bourse without proven profitability. That will encourage smaller firms to apply, but also increase risk.

China's track record also leaves something to be desired when it comes to long-term success of the board itself. STAR is the country's third attempt to build a tech-based board—but the two predecessors, Shenzhen's ChiNext a Beijing-based over-the-counter market, the so-called "New Third Board," have fallen short of expectations.

But for now, Intel is a rare Western company that is seeing STARS.

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