BUSINESS

State-Backed Chip and Server Firms to Merge Amid Self-Reliance Drive

Published: May. 26, 2025 8:14 p.m. GMT+8

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The state-backed firms plan to merge to “seize new development opportunities” in China’s rapidly evolving tech sector. Photo: AI generated

Chinese chipmaker Hygon Information Technology Co. (688041.SH) announced it plans to acquire server manufacturer Dawning Information Industry Co., (603019.SH) or Sugon, as Beijing ramps up its push towards tech self-reliance amid rising geopolitical tensions.

In a letter of intent signed between the two companies, the acquisition will be completed via an all-share swap, Hygon said in a filing to the Shanghai Stock Exchange Monday. The company said it intends to issue A-shares to Sugon’s A-share shareholders, along with a private placement to raise extra funds, without revealing the terms of the deal.

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Hygon plans to acquire Sugon via an all-share swap to strengthen core business capabilities, amid China’s push for tech self-reliance.
Hygon’s 2024 revenue grew 52.4% to 9.16 billion yuan; Sugon’s revenue fell 8.4% to 13.2 billion yuan, with both posting profits near 1.9 billion yuan.
The deal follows new M&A rules and combines two firms previously added to the U.S. Entity List, aiming for vertical integration and R&D growth.

AI generated, for reference only

Who’s Who

Hygon Information Technology Co.: Hygon Information Technology Co. (688041.SH) is a Chinese chipmaker founded in 2014, known for collaborating with AMD to produce x86-based CPUs domestically. Nearly 45% of Hygon is held by Sugon and state-owned investors. It had revenue of 9.16 billion yuan and profit of 1.93 billion yuan in 2024. Hygon was added to the U.S. Commerce Department's Entity List in 2019 and focuses on developing domestic technology solutions.

Dawning Information Industry Co. (Sugon): Dawning Information Industry Co. (Sugon), founded in Tianjin in 2006, is a major Chinese server and cloud solutions provider. It is partially owned by the Chinese Academy of Sciences’ Institute of Computing Technology. Sugon’s revenue in 2024 was 13.2 billion yuan, with a slight profit increase to 1.91 billion yuan. The company is closely linked to Hygon and both were added to the U.S. Entity List in 2019.

Huawei Technologies Co. Ltd.: Huawei Technologies Co. Ltd. is mentioned in the article as a major domestic competitor in China’s information technology sector. The merger between Hygon and Sugon is expected to strengthen their vertical integration and system-level capabilities, positioning them to better compete with Huawei, as well as international rivals like Nvidia, AMD, and Intel.

Nvidia Corp.: According to the article, Nvidia Corp. is mentioned as one of the foreign rivals that Hygon and Sugon, after their merger, aim to compete with more effectively. The merger is expected to strengthen vertical integration and system-level capabilities, positioning the combined company to better challenge competitors including Nvidia, as well as AMD and Intel, in China’s rapidly growing server and IT market.

Advanced Micro Devices Inc. (AMD): Advanced Micro Devices Inc. (AMD) is a U.S.-based chip giant that previously collaborated with Hygon to produce x86-based CPUs domestically in China. The partnership played a role in Hygon’s growth before both companies, including Sugon, were added to the U.S. Commerce Department’s Entity List in 2019, which limited their access to American technologies and prompted a shift toward domestically developed solutions.

Intel Corp.: According to the article, Intel Corp. is mentioned as a foreign rival to the newly merged Hygon and Sugon. The merger aims to strengthen system-level and vertical integration capabilities, positioning the combined Chinese firm to better compete with domestic players like Huawei and foreign competitors such as Nvidia, AMD, and Intel.

Inspur Co. Ltd.: Inspur Co. Ltd. is one of China’s leading server vendors, dominating over half of the country’s accelerated server market alongside competitors like New H3C Technologies and NingChang. The server market in China grew strongly in 2024, driven by rising AI demand and IT investments.

New H3C Technologies Co. Ltd.: According to the article, New H3C Technologies Co. Ltd. is one of the leading vendors in China’s accelerated server market. Alongside companies like Inspur and NingChang, New H3C dominates over half of the market, which reached $22.1 billion in 2024, driven by rising AI demand and IT investments.

NingChang: The article mentions NingChang as one of the leading vendors dominating over half of China’s server market, alongside Inspur Co. Ltd. and New H3C Technologies Co. Ltd. No further details about NingChang are provided in the article.

AI generated, for reference only

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