China’s biggest chipmaker Semiconductor Manufacturing International Corporation (SMIC) may not have leading edge technology but it has great timing. Beijing has urged its citizens to buy the local market — which is now at one-year highs. SMIC has targeted Rmb46bn ($6.55bn) for its Shanghai IPO. Not long ago it had hoped to bring in $2.8bn. Its Hong Kong-listed shares jumped 20 per cent Monday. But SMIC’s long-term prospects are not as inviting as the speculative fever suggests.

Markets have put a value on SMIC at nearly $28bn. Beijing needs technological self-sufficiency as the US tightens sanctions on component sales to Chinese companies. Meanwhile SMIC could use the funds to bolster its scale and cut costs. It has boosted its capex outlook to more than $4bn this year.

Yet, more funds will not guarantee SMIC can catch up with rivals. Analysts estimate SMIC to be at least five years behind its global rivals. It still cannot produce the high-end chips that clients such as Huawei need.