TrendForce News operates independently from our research team, curating key semiconductor and tech updates to support timely, informed decisions.
News
China’s No. 2 foundry, Hua Hong Semiconductor, is reportedly moving to acquire a controlling stake in Shanghai Huali Microelectronics (HLMC) via a combination of share issuance and cash, along with a supporting capital raise, according to ijiwei and Security Times.
The deal, aiming to resolve the industry-competition issue Hua Hong pledged to address at its IPO, would rank among the largest consolidations in China’s semiconductor industry in recent years if completed, as per EETimes China.
Hua Hong Semiconductor announced the plan on August 18, prompting a trading halt expected to last no more than 10 trading days, the reports add.
Hua Hong to Consolidate 65/55nm, 40nm Capacity
EETimes China reports that both Hua Hong Semiconductor and HLMC belong to the Huahong Group. Notably, HLMC’s main assets include Fab 5, an 8-inch facility (55–28nm, ~38,000 wafers/month) established in 2010, and Fab 6, a 12-inch plant focused on 28–14nm processes.
According to ijiwei, the centerpiece of the deal is HLMC’s Fab 5, which operates 65/55nm and 40nm process lines. As these overlap with Hua Hong’s existing business, the acquisition would reportedly give the foundry giant full control and resolve the industry-competition issue it previously pledged to address.
It is worth noting that according to earlier filings cited by EETimes China, Hua Hong and HLMC operate with different strategic focuses—Hua Hong on specialty processes, and HLMC on advanced logic technologies.
More Deal Details
Ijiwei further notes that Hua Hong Semiconductor has signed a preliminary agreement with Huahong Group. However, the final deal has yet to be settled, with details such as equity pricing, cash ratios, and the scale of the supporting fundraising still under negotiation.
The prospective sellers, according to ijiwei, also include Shanghai IC Industry Investment Fund, China’s National IC Industry Investment Fund Phase II, and Shanghai Guotou Leading IC Private Equity Fund.
Strong Q2 Results
Last week, alongside SMIC, Hua Hong Semiconductor released robust second-quarter 2025 earnings, as it reported sales of $566 million, an 18.29% year-on-year increase mainly driven by higher wafer shipments, according to the Hong Kong Economic Journal. Profit attributable to owners of the company reached $7.95 million, up 19.2% from a year earlier.
ijiwei highlights that Hua Hong’s capacity utilization rate hit a record high of 108.3% in the second quarter—up from 102.7% in the first quarter and 97.9% a year earlier.
Read more
(Photo credit: Hua Hong)
