In a surprising turn of events, two of China's leading computing power companies have terminated their planned mega-merger. Sugon Information Industry Co., Ltd. and Hygon Information Technology Co., Ltd. announced the mutual decision to call off the previously proposed acquisition deal, which had been labeled as the "largest merger in China's domestic computing industry."
The transaction, initially announced in May, was structured as a stock swap where Hygon would absorb Sugon. However, the companies cited the deal's large scale, numerous involved parties, prolonged negotiations, and significant changes in market conditions since its conception as the primary reasons for the termination. They emphasized the decision was made to protect the long-term interests of shareholders. Both firms have seen their market value surge since May, with Hygon's reaching approximately 509.7 billion yuan and Sugon's around 146.5 billion yuan.
Despite the collapse of the merger, both companies stated their core strategies remain intact. Hygon will continue to focus on its core business of high-end processor and accelerator chip design. Sugon will maintain its path of building a full-stack ecosystem from "chip-device-cloud-computing." To reassure the market, both announced interim cash dividend plans for 2025.
ICgoodFind's Insight
The termination of this landmark deal represents a significant strategic reset. While the anticipated "chip-to-cloud" integration is delayed, it allows both national champions to independently pursue their distinct paths in the intensely competitive and strategically vital AI computing landscape.
