[News] China’s US$16.4B Chip Megamerger Collapses as Hygon and Sugon Call Off Deal

China’s drive for tech autonomy through deeper integration has encountered an unexpected pause. According to South China Morning Post, supercomputer maker Sugon and chip designer Hygon have scrapped a long-anticipated mega-merger that had been under discussion for months.

As the report notes, the two Shanghai-listed companies said they ended merger talks because the market environment has shifted substantially since the deal was first conceived, and that conditions for executing such a major restructuring are not yet mature.

The cancelled merger has dampened expectations that Sugon and Hygon would form a major domestic ecosystem spanning advanced processors and high-performance servers, as the report notes. The report also states that the proposed transaction—first announced in late May—was expected to be valued at 116 billion yuan (US$16.4 billion), according to corporate filings in June.

Although the merger will not proceed, the report notes that both companies sought to reassure investors that their partnership remains intact. Sugon already holds the largest stake in Hygon, and the firms said they will continue to maintain close supply-chain collaboration, the report adds. As noted by STAR Market Daily, Hygon General Manager and Director Sha Chaoqun said the two companies maintain independent, market-driven operations and can still achieve coordinated, end-to-end development—from chip design to computing-power services—through industrial collaboration.

Hygon on H200’s China Entry

As for whether the recent U.S. approval of NVIDIA’s H200 sales to China will affect China’s chip market, STAR Market Daily notes that Sha said the H200’s entry could intensify competition in the domestic high-end chip segment. However, he added that the accompanying revenue-sharing requirement will push up procurement costs, meaning the chip’s market penetration will continue to face challenges.

As STAR Market Daily highlights, Hygon possesses R&D capabilities in both high-end CPUs and DCUs, and its “CPU + DCU” portfolio enables an integrated computing-power solution. In contexts such as large-scale AI model training and data-center development, its system-level compatibility is said to be significantly higher than solutions that combine third-party CPUs with domestic GPUs.

Read more

• [News] China’s Chip Industry Surges in 1H25 — 38 A-Share Listed Firms Reportedly Post Growth
• [News] China’s Chip Merger Push Reportedly Stalls as 8 Deals Collapse in 2025
• [News] Chipmaker Hygon to Acquire Sugon as China Pushes Chip Sector Consolidation

(Photo credit: Hygon)