(Yicai Global) Sept. 28 -- Shares of Tongfu Microelectronics rallied, having hit the bottom today, after the Chinese semiconductor assembly and testing giant unveiled plans to raise up to CNY5.5 billion (USD852 million) through a non-public issuance of shares to expand capacity.

Tongfu Microelectronics [SHE: 002156] shares slumped 5 percent in the morning since the additional share issuance will dilute existing shareholders’ rights and interests. They stabilized and rebounded, closing up 0.05 percent at CNY18.96 (USD2.94) today, with a market capitalization of about CNY25.2 billion. The Shenzhen Stock Exchange Component Index, meanwhile, closed down 0.18 percent.

Tongfu Microelectronics revealed the plans late last night. It said the offering would be no more than 30 percent of the company’s total share capital and that the money raised would be used for the construction and expansion of several assembly and testing projects, including memory chips, high-performance computing products and fifth-generation communications products.

The company will additionally earn CNY3.8 billion in sales income and CNY445 million (USD68.9 million) in after-tax profit every year after all of the projects into which the raised funds are injected kick off operation, Tongfu Microelectronics predicted.

Jiangsu province-based Tongfu Microelectronics’ revenue surpassed CNY10 billion (USD1.5 billion) last year, ranking fifth among semiconductor assembly and testing companies in the world and second only to JCET Group on the Chinese mainland, according to data from ChipInsights, an industry research institution.

Since last year, the global chip industry has been grappling with short supplies, and Chinese semiconductor firms have unveiled plans for private placement to increase production capacity.

Earlier this month, Tianshui Huatian Technology, also a semiconductor assembly and testing firm, received regulatory approval for a proposed capital increase of CNY5.1 billion. This came on the heels of JCET Group completing its private placement of shares and raising CNY5 billion in May.

Editor: Peter Thomas