[News] China’s Chip Consolidation Heats Up: Hua Hong Acquires 97.5% of Huali, Following SMIC’s Earlier Move

As 2025 drew to a close, China’s chip industry was accelerating its consolidation push. After SMIC unveiled plans to acquire the remaining 49% stake in its Beijing subsidiary in a 40.6 billion yuan ($5.8 billion) share-based deal, the country’s second-largest foundry, Hua Hong Semiconductor, announced late on December 31 that it will acquire approximately 97.5% of Shanghai Huali Microelectronics via a share issuance, in a transaction valued at RMB 8.27 billion, according to Commercial Times and Shanghai Security Times.

According to Shanghai Securities News, Hua Hong previously held a 2.5% stake in Huali Microelectronics, with the acquisition giving Hua Hong full ownership.

Notably, the report further suggests that the deal will directly bolster Hua Hong’s operations, injecting Huali’s 65/55nm and 40nm logic and specialty process technologies and adding around 38,000 wafers per month of capacity, the report notes. This expansion is expected to strengthen Hua Hong’s market position as well. According to TrendForce, as of 3Q25, Hua Hong ranked as the world’s sixth-largest foundry by revenue with a 2.6% global share, while SMIC held third place with a 5.1% share.

Transaction Details

Commercial Times reports that Hua Hong will issue 191 million shares at RMB 43.34 each—a 44.8% discount to the agreement-date closing price of RMB 78.50—to four counterparties, including Hua Hong Group, Shanghai Integrated Circuit Fund, Big Fund Phase II, and Guotou Pioneer Fund, for a combined 97.5% stake in Huali Microelectronics. The target assets are valued at RMB 8.48 billion, with the total deal set at RMB 8.268 billion, according to Shanghai Securities News.

At the same time, the company plans to conduct a non-public share issuance to no more than 35 specific investors (with a six-month lock-up period) to raise up to RMB 7.556 billion, Shanghai Security News adds. The proceeds are reportedly intended for Huali’s technology upgrade and refurbishment projects, development and industrialization of Huali’s specialty process technologies, as well as to supplement working capital, repay debt, and cover fees for intermediary institutions.

It is worth noting that, as Commercial Times reports, on December 29, SMIC announced plans to acquire a 49% stake in “SMIC North,” its mature-node (28–65nm) 12-inch wafer unit, and inject additional capital into “SMIC South,” its advanced-node unit. The moves underscore how China’s semiconductor industry is accelerating consolidation and resource optimization to address market challenges.

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