(Yicai) May 25 -- As semiconductor stocks in China surge to record highs, seven Chinese chip and artificial intelligence supply chain firms unveiled share reduction plans on May 22 worth a combined CNY12.7 billion (USD1.8 billion), based on that day’s closing prices, with Advanced Micro-Fabrication Equipment Inc. China alone accounting for nearly half this total.

AMEC [SHA: 688012], Montage Technology [SHA: 688008], ASR Microelectronics [SHA: 688220], EverProX Technologies [SHE: 300548], Jiangsu Cai Qin Technology [SHA: 688182], Crystal Growth & Energy Equipment [SHA: 688478] and Semitronix [SHE: 301095] all released share reduction announcements on May 22.

Last week, 46 semiconductor stocks, primarily concentrated in the chip equipment, materials and design sectors, soared to new highs. Of those companies involved in the sell-offs, Shanghai-based AMEC and Montage hit all-time highs on May 21 at CNY533.33 (USD78.64) and CNY287.34, respectively.

That day, the CES China Semiconductor Chips Index set a new record of 18,676.56 points, while the STAR 50 Index also reached a new peak of 1,892.6 points the same day.

One notable feature of these sell-offs is that most of the firms have opted to use the ‘inquiry-transfer’ method. Shanghai-based Montage, Cai Qin and Crystal Growth & Energy Equipment all released shareholder inquiry-transfer plans instead of using traditional concentrated bidding or block trades.

Inquiry transfers are different from ordinary share reductions in a few key ways. First, inquiry transfers are only offered to professional institutional investors and do not involve retail investors in the secondary market, so the direct impact on stock prices is smaller. Second, shares obtained through inquiry transfers come with a six-month lock-up period, preventing short-term dumping and reducing price volatility in the secondary market.

The largest planned sell-off involves semiconductor equipment maker AMEC. Shareholder Xunxin (Shanghai) Investment plans to sell no more than 12.5 million shares, accounting for 2 percent of the firm's total shares outstanding. Based on the closing price of CNY469.60 (USD69.22) on May 22, the planned reduction is worth about CNY5.9 billion (USD869.7 million).

At the same time, AMEC founder Yin Zhiyao and seven other company directors and senior executives intend to collectively sell up to 221,600 shares, worth around CNY104 million (USD15.3 million). The reason given for the sale was to meet funding needs related to stock option exercises and taxes.

The second-largest share sale is of Montage, a leading memory interface chip company. Shareholder Shanghai Rongying Enterprise Management Partnership plans to pare its stake by 12.2 million shares, accounting for 1 percent of the firm's total equity. Based on the closing price of CNY271.83 (USD40) on May 22, the stake sale is valued at roughly CNY3.3 billion (USD486 million).

Alibaba Group Holding's second round of selling shares in ASR Microelectronics has also drawn significant market attention. As the Shanghai-based company’s largest shareholder, the e-commerce giant plans to cut its holdings by up to 12.5 million shares, or 3 percent of total equity. Based on the closing price of CNY115.75 (USD17) on May 22, this would fetch Alibaba approximately CNY1.4 billion (USD206.3 million).

Editor: Kim Taylor