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China SMIC Acquires LFoundry to Step into Global Automotive Electronics Market

Published: Jun 26,2016

Semiconductor Manufacturing International Corporation (SMIC) jointly announces with LFoundry Europe GmbH (LFE) and Marsica Innovation S.p.A. (MI), the signing of an agreement on June 24, 2016 to purchase a 70% stake of LFoundry for a consideration of 49 million EUR.

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LFoundry is an integrated circuit wafer foundry headquartered in Italy, which is owned by LFE and MI. At the closing, SMIC, LFE and MI will own 70%, 15% and 15% of the corporate capital of the target respectively. This acquisition benefits both SMIC and LFoundry, through increased combined scale, strengthened overall technology portfolios, and expanded market opportunities for both parties to gain footing in new market sectors.

This also represents the Mainland China IC foundry industry’s first successful acquisition of an overseas-based manufacturer, which marks a major step forward in internationalizing SMIC; furthermore, through this acquisition, SMIC has formally entered into the global automotive electronics market.

As the leading semiconductor foundry in Mainland China, in the first quarter of 2016, SMIC recorded profit for the 16th consecutive quarter with revenue of US$634.3 million, an increase of over 24% year-on-year. In 2015, SMIC recorded annual revenue of US$2.24 billion. In fiscal year 2015, LFoundry revenue reached 218 million EUR.

This acquisition will bring both companies additional room for business expansion. At present, SMIC’s total capacity includes 162,000 8-inch wafers per month and 62,500 12-inch wafers per month, which represents a total 8-inch equivalent capacity of 302,600 wafers per month.

LFoundry’s capacity amounts to 40,000 8-inch wafers per month. Thus, by consolidating the entities, overall total capacity would increase by 13%; this combined capacity will provide increased flexibility and business opportunities for supporting both SMIC and LFoundry customers.

SMIC has a diversified technology portfolio, including applications such as radio frequency (“RF”), connectivity, power management IC’s (“PMIC”), CMOS image sensors (“CIS”), embedded memory, MEMS, and others—mainly for the communications and consumer markets. Complementarily, LFoundry’s key focus is primarily in automotive, security, and industrial related applications including CIS, smart power, touch display driver IC’s (“TDDI”), embedded memory, and others. Such consolidation of technologies will broaden the overall technology portfolios and enlarge the areas of future development for both SMIC and LFoundry.

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