China's largest contract chipmaker, SMIC, has received regulatory approval to acquire the remaining 49% of its Beijing foundry unit, SMNC, in a transaction valued at approximately $5.97 billion. This acquisition will turn SMNC into a wholly owned subsidiary, strengthening SMIC's position in a competitive semiconductor market.
On May 21, China's securities regulator approved SMIC's plan to issue 547.2 million A shares at 74.2 yuan ($11) each. Five state-backed investors, including the China Integrated Circuit Industry Investment Fund, will participate in the share sale. The acquisition is expected to be completed within the next 12 months, allowing SMIC to enhance its operational control and manufacturing capabilities.
This deal is significant beyond just ownership. SMIC is currently operating at near full capacity, with a utilization rate of 95.8% in Q3 2025. The acquisition will likely help meet the growing demand for semiconductors in China. The country’s strategic push to strengthen its technology supply chain has led to a surge in local demand, with mainland China accounting for an impressive 86% of SMIC’s revenue in the same quarter.
As the global semiconductor industry faces supply chain challenges, SMIC's consolidation of its foundry capabilities reflects a wider trend of self-sufficiency among Chinese tech firms. This strategic move aligns with government efforts to reduce reliance on foreign technology and enhance domestic production.
in AI infrastructure and GPU networks, this acquisition positions SMIC as a key player in the emerging AI token economy. With the increasing demand for advanced chips driven by AI applications, the foundry's enhanced capabilities could provide key support for developing AI-driven technologies.
Looking ahead, full ownership of SMNC may allow SMIC to further innovate and address the evolving needs of tech companies in China and beyond. This acquisition is likely to have lasting implications throughout the industry, influencing everything from AI development to GPU market dynamics.
