SMIC Secures Shanghai Exchange Approval for $5.9 Billion SMIC North Buyout

On Monday, the Shanghai Stock Exchange’s M&A Review Committee cleared SMIC’s share‑issuance and asset‑acquisition plan. The committee said the transaction satisfies restructuring and disclosure rules. SMIC North operates two 12‑inch fabs in Tianjin, producing wafers for logic, memory and specialty chips, and provides backend services such as testing, packaging and probe. The subsidiary contributed roughly 30% of SMIC’s total wafer output in 2024, making it a key source of mature‑node capacity.

The deal values SMIC North at RMB 40.601 billion, equivalent to $5.9 billion. SMIC will issue new shares to five current SMIC North shareholders, including the China Integrated Circuit Industry Investment Fund (Big Fund), to buy their 49% stake. The share issuance is priced at a 15% premium to the average closing price of SMIC shares over the past 20 trading days. After closing, SMIC will hold 100% of SMIC North, turning it into a wholly owned subsidiary. The transaction is the biggest wafer‑foundry M&A ever recorded in China, surpassing the previous record of $3.2 billion set in 2022.

Full control lets SMIC streamline capital spending and align process roadmaps across its fabs, reducing duplicate tool purchases. It may accelerate expansion of 28‑nm and 14‑nm capacity, which serves automotive, industrial and IoT customers. Analysts note the move could tighten supply‑chain coordination, potentially shortening lead times for downstream clients. However, the consolidation raises questions about market concentration in China’s domestic foundry space, where SMIC already holds over 60% of mature‑node share. Regulators will likely watch for any anti‑competitive effects as the deal closes, especially concerning pricing and access to capacity for fabless designers.

Investors should monitor the closing timetable, any conditions imposed by the exchange, and how SMIC allocates the added fab output to its product mix. The company has indicated it will use the expanded capacity to meet rising demand for automotive‑grade chips, a segment expected to grow at double‑digit rates through 2027.