SMIC ramps up global expansion with €49m purchase of Italian chipmaker LFoundry

Semiconductor Manufacturing International Corporation (SMIC), China’s largest contract chipmaker, has agreed to take over Italian company LFoundry in a €49 million (HK$422.34 million) deal that marks its first acquisition of an overseas-based integrated circuit manufacturer.

That purchase would enable SMIC to enter and supply chips to the automotive and industrial electronics markets, according to the company’s filing with the Hong Kong stock exchange late Friday.

“The successful completion of the LFoundry acquisition is an important step in our global strategy,” SMIC chief executive Chiu Tzu-yin said.

The transaction followed SMIC’s 2.65 billion yuan (HK$3.1 billion) investment last month to increase its stake in Jiangsu Changjiang Electronics Technology, which runs mainland China’s largest semiconductor packaging assembly and test business.

Listed in both Hong Kong and New York, SMIC agreed to buy 70 per cent of LFoundry from owners LFoundry Europe and Marsica Innovation, which will each retain a 15 per cent shareholding in the acquired company.

The deal is expected to close on or before July 29, according to SMIC.