SMIC acquires LFoundry to enter global automotive electronics

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Semiconductor Manufacturing International Corporation has announced 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. 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.

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.

Dr. Tzu-Yin Chiu, the CEO and Executive Director of SMIC said, “The successful completion of the LFoundry srl acquisition agreement is an important step in our global strategy. Both SMIC and LFoundry will mutually benefit from the shared technology, products, human talents and complementary markets. This will additionally expand our production scale and allows us to service the automotive IC market and for LFoundry to enter into China’s consumer electronics market, thus bolstering our overall development and growth. Through the acquisition, communication and cooperation in the semiconductor industry between China and Europe has been further enhanced, and contributes to the mutual success of the integrated circuit industry in both regions. In the future SMIC will continue to enhance, strengthen, and further expand leadership in the global semiconductor ecosystem.”

Sergio Galbiati, the Managing Director of MI and Chairman of LFoundry srl, said, “This is the beginning of a new era for LFoundry and our Italian fab. We are pleased to become part of a very strong worldwide player, SMIC. Together we can further improve LFoundry’s strength on optical sensor related technology, which is well recognized worldwide, and continue to contribute to the growth of technology in Europe, thanks to our partnerships with many relevant players. The agreement with SMIC will enable us to have a stronger level playing field in Europe.”

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