Hengkun New Materials IPO Review Suspended by Shanghai Stock Exchange

Hengkun New Materials, a company specializing in key materials for the integrated circuit industry, has had its initial public offering (IPO) review temporarily suspended by the Shanghai Stock Exchange. The suspension, announced on July 25, comes as the company was preparing to list on the exchange, aiming to raise significant capital to further its market expansion and technological advancements.

The Shanghai Stock Exchange has requested additional information from Hengkun New Materials regarding several key areas. These include clarifying the technology sources, research and development processes, core personnel, and patent technologies related to the company's self-produced photoresist materials and precursor materials. The exchange also seeks to understand the potential risks of intellectual property disputes and the rationale behind the company's revenue recognition methods for introduced businesses. Additionally, the exchange has asked for explanations regarding the high interest rates on long-term fixed deposits and any potential financial risks associated with these deposits.

Hengkun New Materials is one of the few companies in mainland China with the capability to develop and produce key materials for 12-inch integrated circuit wafers. The company's product portfolio includes photoresist materials such as SOC, BARC, KrF photoresist, and i-Line photoresist, as well as precursor materials like TEOS. The company has also successfully developed ArF immersion photoresist, which is used in the production of advanced NAND and DRAM storage chips, as well as logic chips with 90nm technology nodes and below. These materials are crucial for processes such as photolithography and thin-film deposition in semiconductor manufacturing.

In response to the growing demand for domestic substitution in the integrated circuit industry, Hengkun New Materials has adopted a strategy of introducing, digesting, absorbing, and re-innovating foreign products. This approach has allowed the company to quickly gain customer resources and accumulate experience in product introduction and quality control. As a result, Hengkun New Materials has successfully replaced foreign products with domestically produced alternatives, breaking the foreign monopoly on key materials for 12-inch integrated circuits. The company's clients include multiple leading 12-inch integrated circuit wafer fabs within mainland China, further solidifying its position in the domestic semiconductor supply chain.

The temporary suspension of the IPO review is a common occurrence in the IPO process, as regulatory bodies conduct thorough reviews to ensure compliance with listing requirements. Hengkun New Materials now has the opportunity to address any issues raised by the Shanghai Stock Exchange and demonstrate its readiness for a public listing. The company's strong customer base, technological advancements, and strategic approach to the market position it well for future growth, despite the current setback. The suspension does not necessarily reflect negatively on the company's prospects and provides an opportunity for Hengkun New Materials to strengthen its position in the market.