The largest domestic wafer foundry acquisition has been approved! SMIC's 40.6 billion yuan purchase of a 49% stake in SMIC North has a premium rate of 98%.

Image source: TuChong Creative

On the evening of May 11, SMIC International (688981.SH) disclosed that its plan to acquire a 49% stake in SMIC North China Integrated Circuit Manufacturing (Beijing) Co., Ltd. (hereinafter referred to as “SMIC North China”) has been approved by the Shanghai Stock Exchange’s M&A and Restructuring Committee.

This means that the largest domestic wafer foundry M&A project initiated in 2025 has passed a key regulatory hurdle and will subsequently await registration by the China Securities Regulatory Commission, completion of share issuance, and asset transfer. At that time, SMIC North China will become a wholly owned subsidiary of SMIC International.

According to the recently released “Share Issuance for Asset Purchase and Related Party Transaction Report (Draft for Review)” by SMIC International, the transaction price is approximately 40.6 billion yuan, with a premium rate of 98.19%, and this acquisition will not raise additional funds.

The counterparties are respectively the National Integrated Circuit Industry Investment Fund Co., Ltd. (hereinafter “National IC Investment Center”), Beijing Integrated Circuit Manufacturing and Equipment Equity Investment Center (Limited Partnership) (hereinafter “IC Investment Center”), Beijing Yizhuang International Investment Development Co., Ltd. (hereinafter “Yizhuang Guotu”), Zhongguancun Development Group Co., Ltd. (hereinafter “Zhongguancun Development”), and Beijing Industrial Development Investment Management Co., Ltd. (hereinafter “Beijing Gongtou”).

After the completion of this transaction, the National IC Investment Center, IC Investment Center, Yizhuang Guotu, Zhongguancun Development, and Beijing Gongtou will hold 4.18%, 1.18%, 0.75%, 0.15%, and 0.15% of SMIC International’s shares, respectively, ranking among its top ten shareholders. Notably, this M&A does not include performance commitments or compensation agreements.

Less than three months from acceptance to approval

The acquisition of SMIC North China by SMIC International was initiated at the end of August 2025. In about four months, the total transaction amount and issuance price were finalized at 40.6 billion yuan and 74.2 yuan per share, respectively.

From the timeline, the review process for this M&A was quite rapid. In February 2026, the transaction was officially accepted by the Shanghai Stock Exchange; in early March, SMIC International received an inquiry letter from the SSE regarding the transaction; in April, SMIC International responded to the inquiry and disclosed the “Revised Report on Share Issuance for Asset Purchase and Related Party Transaction” (hereinafter “Revised Report”). Finally, on May 11, the SSE’s M&A and Restructuring Committee approved the transaction.

This is the largest M&A and restructuring case in the history of the STAR Market, taking just over eight months from initiation to approval, and less than three months from acceptance to approval.

It is reported that SMIC North China is headquartered in Beijing, with two 12-inch wafer production lines, each with a monthly capacity of 35k wafers, totaling a monthly capacity of 70k wafers. Its core business covers mature process nodes from 65nm to 28nm, making it one of the leading domestic chip manufacturing bases in terms of technology.

In recent years, SMIC North China’s operational benefits have continued to improve. In 2023, 2024, and January-August 2025, its operating revenues were 35k yuan, 70k yuan, and 11.58B yuan; net profits attributable to parent after deducting non-recurring gains and losses were 549 million yuan, 1.63 billion yuan, and 12.98B yuan; gross profit margins were 10.73%, 12.50%, and 14.74%, showing a continuous upward trend.

Notably, as a key operational indicator in the wafer foundry industry, the EBITDA profit margin of SMIC North China was 49.94%, 51.64%, and 52.58% in 2023, 2024, and January-August 2025, respectively, significantly higher than the industry average, reflecting its advantages in cash flow generation, cost management, and scale effects.

SMIC North China’s capacity utilization rate has also steadily increased, reaching 88.74%, 96.34%, and 100.76% in 2023, 2024, and January-August 2025, indicating its production efficiency is at a relatively high level in the industry.

Intensifying competition calls for solidifying scale advantages

Behind this acquisition is the increasingly fierce competitive landscape in the wafer foundry industry. Wafer manufacturing is the core link in chip production, and chips are the fundamental hardware for digital economy, AI, new energy, and other fields. With the explosive growth in AI computing power, new energy vehicles, and power semiconductors, the importance of the wafer foundry industry is increasingly prominent.

This industry trend is directly reflected in the performance of leading companies. Financial reports show that SMIC International, as a leading wafer foundry, had an estimated revenue of about 67.32 billion yuan in 2025, a year-on-year increase of 16.5%; net profit attributable to parent was approximately 9.01B yuan, up 36.3%; gross margin and net margin were 21.6% and 10.7%, respectively. In that year, SMIC’s wafer foundry revenue was about 62.79 billion yuan, an increase of 17.9% year-on-year.

However, although SMIC International ranked second globally and first domestically among pure-play foundries in 2025, it still acknowledged that there is a gap in technological level compared to global industry leaders, and its market share remains limited. Future capacity structure may face oversupply.

“Going forward, if the company cannot provide competitive process technologies and platforms in a timely manner, it may face customer loss and weakened pricing power,” SMIC International stated.

The acquisition of SMIC North China is a strategic move for SMIC International to strengthen its scale advantages and increase synergy to better compete in the market.

In fact, SMIC North China is already an important controlled subsidiary of SMIC International, which currently holds a 51% stake. SMIC recently stated that although it has achieved control, major operational decisions, capacity planning, customer allocation, and technical routes still require multi-party shareholder communication and decision-making processes, which involve certain communication costs.

Becoming a wholly owned subsidiary will simplify governance, enable unified decision-making and efficient execution, and strengthen control over core wafer manufacturing assets, aligning with the asset-heavy, long-cycle, highly collaborative operational characteristics of the wafer manufacturing industry. After the transaction, SMIC will achieve deep integration with SMIC North China in process technology, customer resources, supply chain, capacity layout, and operational management.

Specific benefits include sharing technological platforms to accelerate process maturity and iteration, reducing R&D costs; consolidating procurement to enhance bargaining power and ensure supply chain security; centrally allocating 12-inch mature process capacity to improve overall delivery; and unifying production, quality, and financial management systems.

(Edited by: Zhang Xiaobo)

【Disclaimer】This article only reflects the author’s personal views and has no relation to Hexun. Hexun.com maintains neutrality regarding the statements and opinions in the article and does not guarantee the accuracy, reliability, or completeness of the content. Readers should use it as a reference and bear all responsibilities themselves. Email: news_center@staff.hexun.com