SMIC announces plan to acquire 49% stake in SMIC North through share issuance

SMIC announces plan to acquire 49% stake in SMIC North through share issuance

Semiconductor Manufacturing International Corporation (SMIC), China's leading contract chipmaker, has announced plans to fully acquire Semiconductor Manufacturing North China (Beijing) Corporation (SMNC) through the issuance of A-shares. Currently, SMIC owns 51% of SMNC, with the remaining 49% held by state-owned investors. The acquisition will involve issuing A-shares to the current shareholders, giving SMIC full control of the subsidiary [1].

This strategic move aligns with a broader trend of consolidation within China's semiconductor industry, aiming to streamline operations and bolster SMIC's manufacturing capabilities, particularly in advanced technologies such as 45 nanometer and smaller [1]. The deal is still in its preliminary stages, with certain elements of the transaction under negotiation. SMIC's shares listed in Shanghai were suspended for a maximum of ten trading days following the announcement [1][2]. Despite the suspension, SMIC's Hong Kong-listed shares gained more than 5% on Monday morning and later closed up nearly 4.9% at HK$63.65 [2].

The acquisition is part of a broader effort by China's major chip foundries to consolidate their businesses and bolster growth. Similar moves have been seen with Hua Hong Semiconductor, which plans to acquire 97.5% of its sister foundry, Shanghai Huali Microelectronics [2].

For SMNC, the acquisition will mean full integration into SMIC's operations, potentially leading to increased efficiency and market share. In 2021, SMNC reported operating revenue of $1.51 billion and a net profit of $314 million, indicating a strong financial performance [1]. The first half of 2025 saw SMNC and another SMIC subsidiary, Semiconductor Manufacturing Beijing Corporation (SMBC), collectively generate revenue of 8.87 billion yuan ($1.24 billion) and a combined net profit of 125 million yuan [1].

In conclusion, SMIC's acquisition of SMNC through the issuance of A-shares is a strategic move aimed at consolidating its semiconductor manufacturing capabilities. This move aligns with broader industry trends and could lead to increased efficiency and market share for SMIC. The deal is still in the early stages, and further details are expected to emerge as negotiations progress.

References:
[1] https://www.ainvest.com/news/smic-issue-shares-fully-acquire-semiconductor-manufacturing-north-china-beijing-corp-2509/
[2] https://www.scmp.com/tech/tech-trends/article/3323904/smic-take-full-control-subsidiary-chip-foundry-chinas-fab-industry-consolidates