SMIC Announces Strategic Expansion and Capital Increase

Semiconductor Manufacturing International Corporation (SMIC), the leading foundry in the information technology sector, has announced two significant developments that are set to reshape its growth trajectory in the coming year.

1. Acquisition of a 49 % Stake in SMNC

On 30 December 2025, SMIC disclosed that it has entered into a definitive agreement to acquire a 49 % equity stake in SMNC for a final purchase price of RMB 40.6 billion. The transaction was reported to be a strategic move to consolidate SMIC’s presence in the broader semiconductor ecosystem and to leverage SMNC’s manufacturing capabilities.

  • Financial Impact: The acquisition is expected to generate an increase of 3 % or more in SMIC’s share price, as reflected in the 3.67 % rally seen on the Hong Kong Stock Exchange (HKSE) during the day of the announcement. The stock closed at HK $72.1, up 2.59 % from the previous close, with a turnover of 10.41 million shares (approximately HK $746 million).
  • Shareholder Value: The deal is anticipated to enhance SMIC’s revenue base and diversify its product portfolio, thereby strengthening its competitive position against other global foundries.
  • Strategic Rationale: By securing a significant stake in SMNC, SMIC gains access to additional fabrication capacity and technology resources, positioning itself to meet the escalating demand for advanced chips across multiple sectors, including automotive, communications, and consumer electronics.

2. New Joint Venture Agreement and Capital Increase for SMIC South

In a concurrent development, SMIC announced the signing of a new joint‑venture contract for SMIC South (中芯南方), coupled with an additional capital‑increase agreement. The joint‑venture partnership involves SMIC Holdings and several national investment funds, including the National Integrated Circuit Fund and the Shanghai Integrated Circuit Fund.

  • Capital Expansion: SMIC South’s registered capital will rise from US $3.5 billion to US $6.5 billion. This expansion is intended to support large‑scale investment in next‑generation manufacturing facilities and to secure long‑term supply agreements with key customers.
  • Strategic Context: The move aligns with the Chinese government’s “Made in China 2025” initiative, which prioritizes domestic semiconductor production and aims to reduce reliance on foreign technology. By increasing its stake and capital base in SMIC South, SMIC reinforces its commitment to this national priority.
  • Financial Implications: The capital increase will provide the company with a robust balance sheet, enabling it to fund research and development, acquire cutting‑edge lithography tools, and expand its wafer‑processing capabilities.

3. Market Position and Outlook

  • Market Capitalisation: As of 29 December 2025, SMIC’s market cap stood at HK $699.8 billion, reflecting its status as one of the most valuable semiconductor foundries on the Hong Kong Stock Exchange.
  • Share Price Trend: The company’s closing price of HK $72.5 on 29 December sits comfortably below its 52‑week high of HK $133 (28 October 2025) but above its low of HK $28.35 (2 January 2025). This volatility underscores the sector’s sensitivity to macroeconomic shifts and geopolitical tensions.
  • Strategic Vision: The combination of the SMNC stake and the SMIC South joint‑venture is expected to create synergies that will enhance manufacturing throughput, reduce unit costs, and accelerate time‑to‑market for advanced process nodes (e.g., 7 nm, 5 nm).

4. Conclusion

SMIC’s recent announcements signal a decisive push toward scaling its manufacturing footprint and fortifying its strategic partnerships. By securing a substantial stake in SMNC and expanding the capital base of SMIC South, the company is positioning itself to capture growth opportunities in an increasingly competitive semiconductor landscape. Investors and industry observers will closely monitor the execution of these deals and the resultant impact on SMIC’s financial performance and market share in the years ahead.