On September 1st, two leading domestic wafer foundry companies - Semiconductor Manufacturing International Corporation (688981.SH / 00981.HK) and HUA HONG SEMI (688347.SH/01347.HK) - made contrasting moves regarding M&A activities: SMIC suspended trading on that day, while HUA HONG SEMI resumed trading on the same date.

On the evening of August 31st, HUA HONG SEMI disclosed a transaction proposal to acquire controlling interest in Shanghai Huali Microelectronics Co., Ltd. ("Huali Micro"). According to the announcement, HUA HONG SEMI plans to acquire a combined 97.5% stake in Huali Micro held by four counterparties - Hua Hong Group, Shanghai Integrated Circuit Fund, National IC Fund Phase II, and Guokong Pioneer Fund - through a combination of share issuance and cash payment. The company also intends to raise supporting funds by issuing shares to no more than 35 qualified specific investors at a price of 43.34 yuan per share, representing approximately 44.8% discount compared to HUA HONG SEMI's A-share closing price of 78.50 yuan on the last trading day before suspension (August 15, 2025).

HUA HONG SEMI and Huali Micro are "sister companies" both under the Hua Hong Group system: Huali Micro is a controlling subsidiary of Hua Hong Group, while Hua Hong Group is an indirect controlling shareholder of HUA HONG SEMI. However, their business positioning differs: Huali Micro focuses on advanced logic process wafer foundry services, with core assets being Fab 5 and Fab 6. Fab 5 was established in 2010, covering 65nm/55nm and 40nm technology nodes; Fab 6 is a 12-inch wafer facility primarily covering 28nm-14nm processes, which began production in October 2018.

In contrast, HUA HONG SEMI specializes in specialty process platforms covering embedded memory, power devices, analog power management and other areas, with expertise in mature node specialty processes. Its process technology covers 0.35μm to 65nm nodes. Currently, it operates three 8-inch wafer fabs (Fab 1, Fab 2, and Fab 3) in Shanghai's Jinqiao and Zhangjiang areas, plus two 12-inch specialty process wafer fabs (Fab 7 and Fab 9) in Wuxi High-tech Industrial Development Zone.

Regarding this acquisition, HUA HONG SEMI previously announced that the target asset is Fab 5 operated by Huali Micro, which creates business competition with HUA HONG SEMI in 65nm/55nm and 40nm process services.

As the core listed platform of Hua Hong Group, HUA HONG SEMI was established in 2005 and headquartered in Shanghai Zhangjiang. It listed on the Hong Kong Stock Exchange in 2014 and debuted on the STAR Market in August 2023, achieving dual "A+H" listings. According to the prospectus, to completely resolve competition issues, HUA HONG SEMI committed to inject Huali Micro into the listed company system within 3 years from its STAR Market listing date (August 7, 2023) after completing relevant approval procedures.

In contrast to HUA HONG SEMI's trading resumption, China's largest wafer foundry SMIC announced trading suspension on the same day, citing plans to acquire the 49% minority stake in its controlling subsidiary SMIC Beijing through new share issuance.

On August 29th, SMIC announced it was planning to acquire minority stakes in SMIC Beijing through A-share issuance, with preliminary transaction counterparties including China Integrated Circuit Industry Investment Fund Co., Ltd. ("Big Fund Phase I"), Beijing Integrated Circuit Manufacturing and Equipment Equity Investment Center (Limited Partnership), and Beijing Yizhuang International Investment Development Co., Ltd. The company stated this transaction does not constitute a major asset restructuring but is a related-party transaction. SMIC's A-shares suspended trading from September 1st, with expected suspension period not exceeding 10 trading days.

SMIC Beijing was established in July 2013 as a joint investment between SMIC and Beijing municipal government, focusing on 12-inch wafer manufacturing with process capabilities covering 65nm to 28nm. As the controlling shareholder and technology source for SMIC Beijing, SMIC is fully responsible for its production and operations. Currently, SMIC Beijing operates two 300mm production lines with monthly capacity of 35,000 wafers each: the first line mainly produces 40nm and 28nm Polysion process products; the second line features 28nm HKMG and more advanced technologies, with total monthly capacity reaching 70,000 wafers.

The shareholding structure shows Big Fund Phase I currently holds 32% of SMIC Beijing shares, while SMIC controls 51% through multiple subsidiaries. Upon successful completion of this acquisition, SMIC will achieve full ownership of SMIC Beijing.

Industry analysts believe SMIC's acquisition is driven by several considerations: First, bringing profitable assets back to the listed company to enhance profits. SMIC Beijing has operated for over a decade with production line depreciation largely complete or nearing completion, demonstrating strong profitability. After acquiring the remaining 49% stake, SMIC's ownership will reach 100%, expected to significantly boost net profit attributable to shareholders. Second, meeting exit demands from Big Fund Phase I and other shareholders. Big Fund Phase I was established in September 2014 and has operated for nearly 11 years, entering an "extension period" after its harvest phase in 2024, creating strong exit motivation, with other shareholders having similar demands.

In its latest announcement, SMIC did not separately disclose SMIC Beijing's operating revenue. However, according to its interim report, SMIC Beijing and SMIC Jingcheng projects combined achieved revenue of 8.867 billion yuan and net profit of 126 million yuan in the first half, compared to revenue of 7.28 billion yuan and net profit of 606 million yuan in the same period last year.