China Witnesses Surge in A-Share Chip M&A Activity: Over 73 Applications Submitted in 18 Months, Totaling $55 Billion

China’s semiconductor industry is undergoing a significant transformation as the U.S. tightens its grip on chip exports. Reports suggest that the A-share chip sector in China has witnessed more than 23 mergers and acquisitions in just 18 months, with a total deal value exceeding $55 billion in 2024 alone.

In 2024, over 50 mergers were reported in the Chinese chip sector, amounting to a total deal value of approximately $55.7 billion. This surge in M&A activity aligns with South Korea’s Etnews report from April, which highlighted China’s plan to consolidate more than 200 chip equipment companies into just 10 key players, as many of these firms rely on government subsidies.

Foundry giant SMIC recently announced plans to sell its entire 14.83% stake in SMIC Ningbo to Goke Microelectronics, while chip designer Hygon and supercomputer firm Sugon underwent a major asset restructuring. Similarly, Chinese chip equipment giant Naura Technology acquired a 9.5% stake in photolithography toolmaker Kingsemi. The wave of consolidation has also extended to the EDA sector, as Primarius Technologies acquired a stake in Chengdu Analog Circuit Technology.

Chinese experts have attributed this consolidation trend to the National IC Fund Phase II, which has shifted the focus of China’s chip sector towards building a robust local supply chain. The momentum for integration has only intensified with the commencement of Phase III in 2024, as China aims to strengthen its semiconductor industry domestically.

Despite the flurry of M&A activities, not all deals in China’s chip sector have materialized. Goodix abandoned its bid for Shenzhen Yunyinggu, while Ingenic withdrew its acquisition of Fremont Micro Devices due to valuation discrepancies and conflicting interests. These instances serve as a reminder that not all mergers and acquisitions in the semiconductor industry translate to successful transactions.

Overall, China’s semiconductor industry is witnessing a wave of consolidation driven by government initiatives and the need for a more robust local supply chain. As China accelerates its efforts to build a self-sufficient semiconductor ecosystem, mergers and acquisitions will continue to play a pivotal role in shaping the future of the country’s chip sector.