Spending 160 million, why did SMIC choose this "potential stock" in particular?

Ask AI · How will both parties achieve MCU and storage chip collaboration after investing?

Produced by | China-Visits Net

Reviewed by | Li Xiaoyan

On the evening of March 22, SMIC (Semiconductor Manufacturing International Corporation) announced that it plans to increase its capital by RMB 160 million using its own funds to Zhuhai Boya Technology Co., Ltd., subscribing for RMB 12.5 million in additional registered capital. After the transaction, SMIC will hold 20% of Zhuhai Boya’s shares and become a shareholder. Against the backdrop of a global semiconductor market rebound and accelerated domestic substitution, this capital increase is not only a key step for SMIC to enhance its “MCU + strategy,” but also reflects the logic behind domestic chip companies’ plans for high-quality development through industry chain collaboration.

Looking back at this investment, there are clear strategic considerations and business collaboration needs behind SMIC’s decision. As a chip design company centered on MCU (microcontroller unit), storage chips have become a core layout area of the company’s “MCU + strategy.” Earlier this year, SMIC released its first SPI NOR Flash product, officially entering the storage product market. This capital increase in Zhuhai Boya is a further enhancement of that layout. By leveraging the target company’s technology and product accumulation, it can quickly address R&D and mass-production weaknesses in the storage chip field, forming a “MCU + storage” synergy and strengthening the competitiveness of its one-stop intelligent control solutions.

From expectations, this investment is likely to achieve a win-win outcome for both sides. SMIC stated that in 2026, the storage chip market is expected to continue rebounding. Currently, Zhuhai Boya has shown a strong momentum, with significant revenue growth and a rapid increase in gross margin. The operating funds provided by this capital increase will help Zhuhai Boya enter a phase of rapid growth and is expected to turn losses into profits. For SMIC, relying on Zhuhai Boya’s technology accumulation in the NOR Flash field can further enrich its storage product portfolio, expand downstream applications such as consumer electronics, industrial control, and automotive electronics. Meanwhile, leveraging synergies can reduce R&D and market expansion costs, injecting new momentum into revenue growth. Additionally, this investment uses the company’s own funds, so it will not significantly impact SMIC’s financial condition or operating results, reflecting a prudent investment strategy.

Supporting SMIC’s bold expansion is its own strong operational performance. According to the 2025 annual report, the company achieved RMB 1.122 billion in revenue for the year, up 23.09% year-over-year; attributable net profit was RMB 284 million, a sharp increase of 107.68%, with both revenue and profit growing rapidly. The growth was mainly driven by two factors: first, the rapid increase in shipments of automotive-grade chips and industrial control chips, with automotive-grade chip shipments doubling year-over-year; second, ongoing product mix optimization, with 32-bit MCU sales increasing from about 32% to 36%, and overall gross margin rising from approximately 30% last year to 34%. As of the end of 2025, SMIC’s total assets were RMB 3.68 billion, with RMB 3.178 billion in owners’ equity, and sufficient cash reserves, demonstrating its financial capacity for external investments.

In terms of capacity, SMIC announced in January this year a price increase for its MCU and NOR Flash products, ranging from 15% to 50%, mainly due to tight upstream wafer capacity and longer foundry lead times. The company indicated that some product lines are currently in short supply, with customers waiting for delivery, and overall downstream demand continues to grow.

From the market competition perspective, the NOR Flash industry is highly concentrated. In the automotive NOR Flash segment, the top five global manufacturers—Infineon, Winbond Electronics, Micron Technology, Nanya Electronics, and GigaDevice—together hold about 84% of the market share. Taking GigaDevice as an example, the industry leader, it has focused on NOR Flash for many years, and in 2025, ranked among the top in the global NOR Flash market. Compared to that, Zhuhai Boya, which is being capitalized, although currently under performance pressure, has clear technological and product advantages, making it an important foundation for SMIC’s storage strategy.

Founded in 2014, Zhuhai Boya was established with participation from a returnee PhD. It specializes in R&D and design of storage chips such as NOR Flash. Its founder and controlling person, DI LI, is a senior expert in flash memory technology, with previous experience at Micron and FISO Semiconductor, bringing extensive industry expertise. The core technical team also has over 10 years of experience in flash chip design, mass production, and commercialization, with a strong technical background.

From an industry perspective, the cooperation between SMIC and Zhuhai Boya aligns with the development trends of the semiconductor industry. Currently, the industry is entering a new growth cycle. On one hand, explosive demand for AI computing power, a rebound in the storage chip market, and ongoing automotive electronics development are driving strong growth. The World Semiconductor Trade Statistics (WSTS) predicts that by 2026, the global semiconductor market will grow 26.3% to USD 975 billion, with storage chips as a key growth driver, facing capacity constraints that will create opportunities for related companies. On the other hand, driven by geopolitical factors and domestic substitution, industry mergers and acquisitions are accelerating.

At present, China’s semiconductor industry is transitioning from “single-point breakthroughs” to a new stage of “ecosystem integration.” For SMIC, this investment is not only an extension of its industry layout but also a crucial step in transforming from an MCU manufacturer into a provider of comprehensive intelligent control solutions. As SMIC Vice President Yu Feng stated: “In the semiconductor industry, besides AI, the next major development cycle is storage.” With Zhuhai Boya’s ongoing push toward high-end products and the cyclical recovery of the storage market, the synergistic effects of this investment are expected to gradually become evident in the future.