Chip maker SMIC may ease up on acquisitions to focus on growth

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SMIC’s 28nm business reached 5 per cent of wafer revenue in the first quarter, representing a growth of 39 per cent quarter on quarter. Photo: Handout

Published: 10:06am, 5 Jun 2017Updated: 4:15am, 3 Feb 2021

With a new leader at its helm, Semiconductor Manufacturing International Corp (SMIC) may pull back on efforts to target its next strategic corporate acquisition, while sharpening focus on its existing production strategy.

SMIC, mainland China’s largest contract chip maker, announced last month the appointment of Zhao Haijun as the company’s new chief executive, replacing Chiu Tzu-yin.

“I don’t think the new chief executive will be aggressive in mergers and acquisitions,” Bernstein Research senior analyst Mark Li told the South China Morning Post.

“We welcome the new chief executive’s vow to keep SMIC on the same strategic course. Striking a balance between growth and profitability, we believe, is the only workable strategy in the long run.”

Zhao will likely be busy with fully integrating the operations of LFoundry, the Italian contract chip manufacturer that SMIC acquired for €49 million (US$55 million) in June last year, according to Li.

He also expected Zhao, who previously served as chief operating officer at SMIC, to further develop the company’s growing chip-fabrication business using so-called 28nm (nanometre) process technology, which is used for high end applications such as microprocessors, high-speed networking chips and graphics processors.