News
SMIC restructures capital to capture mature node profits and fund advanced node expansion
Thursday, January 1, 2026 at 06:24 AM
SMIC is restructuring its capital to support different manufacturing nodes. The company is acquiring the remaining 49% stake in SMIC North, its 28nm-65nm mature node fab, for approximately 406 billion RMB as equipment depreciation cycles end, allowing it to capture 100% of profits. Simultaneously, SMIC is securing a $7.78 billion capital injection from Big Fund Phase III and six major Chinese state banks for SMIC South, which focuses on 14nm FinFET and more advanced technology nodes and capacity expansion.
Context
SMIC is restructuring its capital to maximize returns from mature nodes while accelerating advanced development. The company is acquiring the remaining 49% of SMIC North for 40.6 billion RMB, a move timed to capture 100% of the profits from 28nm-65nm lines as equipment depreciation cycles end. Net profits at the unit spiked from 585 million RMB in 2023 to 1.68 billion RMB in 2024, providing a significant "depreciation dividend" to fund the group’s broader expansion and stabilize margins.
Simultaneously, SMIC secured a $7.78 billion investment for SMIC South, its 14nm FinFET division, backed by Big Fund Phase III and six major state banks. This capital injection is vital for scaling advanced capacity and navigating international equipment constraints. By leveraging mature-node cash flow for balance sheet stability and state-led capital for high-risk advanced expansion, SMIC is executing a dual-track strategy to sustain growth through 2026.
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