Huahong Semiconductor announced a major strategic move, proposing an RMB 8.268 billion acquisition of a 97.4988% stake in Shanghai Huali Microelectronics Corporation (HLMC). This transaction, involving a concurrent RMB 7.556 billion private placement, fulfills a post-IPO commitment to resolve while significantly strengthening its position in mature semiconductor process technologies. The market reacted positively, with Huahong's stock price rising 10.36% following the announcement.
The deal will be executed via a share issuance. Huahong will issue approximately 191 million new shares at RMB 43.34 per share to four entities, including its parent company Huahong Group and state-backed investment funds. HLMC, valued at RMB 8.48 billion—a 323.59% premium—holds core value as the operator of Mainland China's first fully automated 12-inch foundry line. With a designed monthly capacity of 38,000 wafers, HLMC has achieved mainstream industry levels in 65/55nm and 40nm processes. It reported 2024 revenue of RMB 4.988 billion and net profit of RMB 530 million, demonstrating stable profitability. The acquisition will directly integrate overlapping assets, including Fab 5, finally eliminating.
Proceeds from the concurrent fundraising are earmarked for HLMC's technological upgrades, R&D in specialty processes, industrialization projects, alongside working capital and debt repayment. With 15 years of experience, HLMC's technology spans 28nm to 65/55nm nodes, covering logic, RF, high-voltage, and CIS specialty processes for consumer electronics, IoT, and automotive applications, creating highly complementary synergies with Huahong's existing business.
Huahong currently operates a diversified capacity layout through Huahong Grace, which manages three 8-inch fabs covering 1μm to 90nm nodes. Its Wuxi base includes a 12-inch fab (Fab 7) with 40,000 wafers/month capacity and a second phase (Fab 9) that began production last year. Post-merger, the company will significantly enhance its 8-inch and 12-inch manufacturing synergy, achieving greater scale and deeper collaboration in management, process R&D, and supply chain within the mature node segment.
ICgoodFind Perspective: This consolidation accelerates focus on mature process nodes. We are committed to helping the industry connect with high-quality capacity resources and seize opportunities in the evolving supply chain landscape.
