Hygon to acquire Sugon in US$16.2b share swap, forging China's full-stack computing giant

Hygon Information Technology, one of China's leading artificial intelligence chipmakers, has announced plans to acquire server manufacturer Dawning Information Industry Co (Sugon) in a massive 116-billion yuan (US$16.2 billion) share-swap deal.

This strategic integration will strengthen China's in-house advanced computing ecosystem, spanning from chips and software to complete server systems.

Both companies are currently listed on the Shanghai stock market.

Sugon, a computer server firm, originally incubated Hygon as a startup and held a 27.96 percent stake, making it Hygon's major shareholder before this merger plan. Notably, Hygon's shares, valued at 88.5 billion yuan, contributed substantially to Sugon's market value of 90.5 billion yuan.

According to a joint statement filed with the Shanghai Stock Exchange, each Sugon share will be swapped for 0.55 shares of Hygon.

This integration is expected to optimize the industrial layout by consolidating high-quality resources across the upstream and downstream segments of the information industry chain. The move aims to further promote the large-scale application of domestically-made chips in critical sectors such as government affairs, finance, communications, and energy.

Industry insiders suggest the merger is a direct response to surging domestic demand for AI capabilities and is crucial for bolstering China's drive for technological independence, thereby reducing reliance on foreign, particularly United States, technologies.