What chip bust? Semiconductor firm jumps almost 15% in Japan’s biggest IPO of the year

October 13, 2022, 8:13 AM UTC
A semiconductor surrounded by a circuit board
A Japan semiconductor IPO is a rare bright spot for a chip sector battered by slowing demand and U.S. export curbs.
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Shares in semiconductor firm Socionext surged 14.6% in their debut on the Tokyo Stock Exchange on Wednesday, defying both a drought in initial public offerings and a rapidly deflating chip market

The jump in share price follows the firm’s IPO, raising $454 million in Japan’s biggest IPO yet for the year. Socionext’s listing dwarfs the country’s second-biggest offering from outsourcing firm Bewith, which raised $55 million in October. Globally, IPOs are in a slump as companies postpone listing owing to concerns about geopolitical tensions and a looming economic slowdown driven by inflation and interest rate hikes. 

Socionext was formed in 2015 from the semiconductor divisions of Fujitsu and Panasonic Holdings. The firm designs “systems on chip,” which combine multiple functions—like computer processing, graphics processing, Wi-Fi, memory, and other important functions—on a single chip. Because of their smaller size and greater power efficiency, such chips are primarily used in mobile devices, like smartphones and tablets, and Internet of Things devices. 

Socionext serves companies working in the automotive sector, as well as providers of 5G technology.

Socionext shares dipped slightly on Thursday, falling 0.5% by 3 p.m. Japan time, matching a similar 0.6% decrease in the Tokyo Stock Price Index.

Deflating chip market

Socionext’s strong debut is a rare bright spot for the semiconductor industry.

Semiconductor companies have lost a combined $240 billion in market value since the Biden administration announced tough new export controls on chip sales to China. Chip companies that use U.S. equipment can no longer sell the most advanced chips to any Chinese company, and are barred from selling even less-advanced chips to almost 30 major Chinese technology firms. Sales of chipmaking equipment are also blocked.

The Philadelphia Semiconductor Index, which tracks major semiconductor companies like Nvidia and Advanced Micro Devices, is down 6.7% since Monday. Asian chip stocks are down, too. Shares in Taiwan Semiconductor Manufacturing Co. (TSMC), the world’s largest contract chipmaker, have fallen 9.5% since the weekend, while China’s Semiconductor Manufacturing International Corp., the country’s largest chip manufacturer, is down 11.4% over the same period. 

On Thursday, TSMC said it would slash its capital spending target for the year by 10%.

Chip companies were already struggling owing to a downturn in consumer electronics sales. Intel is planning to cut thousands of jobs in its sales and marketing divisions because of slowing personal computer sales, Bloomberg reported on Tuesday.

PC sales are down almost 20% compared with a year ago, according to a Gartner report released Tuesday.

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