[News] China’s Chip Merger Push Reportedly Stalls as 8 Deals Collapse in 2025

According to Financial Times, China is reportedly facing setbacks in its efforts to consolidate its fragmented semiconductor sector into a few dominant state-backed players capable of competing with major U.S. and European firms. Sources cited in the report say that merger talks among chip manufacturing equipment companies have stalled due to resistance from firms and investors over ownership structures and valuations.

Citing sources, the report adds that earlier this year, China convened several chip equipment manufacturers to explore a potential megamerger that would combine various technologies into a single state-backed powerhouse. The initiative is reportedly being led by the National Development and Reform Commission.

As the report notes, Beijing hopes that consolidation will help direct funding more effectively toward strategically important firms. The country aims to build a self-reliant semiconductor supply chain and lessen its reliance on U.S. firms such as Applied Materials and Lam Research, according to analysts cited in the report.

Still, progress of consolidation in China’s chip industry has been uneven. Several high-profile deals have fallen through. For example, Financial Times points out that leading EDA firm Empyrean Technology announced plans in March to acquire smaller rival Xpeedic, but the agreement was never finalized. In total, eight previously announced deals have failed to close so far in 2025, according to the report’s calculation.

That said, deal activity remains robust. As Financial Times notes, 26 semiconductor acquisitions have been announced this year. If completed, 2025 could be on track to match last year’s post-pandemic high of 45 deals.

Among the most notable transactions, the report highlights a merger announced in May between Hygon—a CPU designer for servers and data centers—and supercomputer manufacturer Sugon.

In addition, Tom’s Hardware notes that Naura Technology—China’s largest chip equipment maker specializing in etching and deposition—has acquired a 9.49% stake in photolithography coating equipment firm Kingsemi for $235 million, marking another significant move in China’s effort to strengthen its domestic semiconductor equipment ecosystem.

Meanwhile, Financial Times points out that China’s foundry sector may be one of the most pressing areas in need of consolidation. With many local government-backed projects ramping up capacity in parallel, the result has been a glut of mature chips and intense price competition. Industry experts cited in the report emphasize that consolidation is especially needed in this area, where duplicated efforts and dispersed talent have hindered progress.

Read more

• [News] Chinese EDA Consolidation Falters as Empyrean Drops Xpeedic Acquisition
• [News] China’s A-Share Chip M&A Boom: 73+ Applications Reportedly in 18 Months, $55B Deal Value in 2024

(Photo credit: FREEPIK)