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AsianFin -- Hygon Information Technology and Sugon, China's two leading IT companies, announced Sunday that Hygon will acquire Sugon via a share swap, merging the two companies. Trading will be suspended from Monday for up to 10 trading days.
This deal marks the first merger case since the implementation of China's new Administrative Measures for Major Asset Restructuring of Listed Companies in May 2025. The transaction has drawn significant attention as both firms are pivotal players in China's domestic computing power sector.
Industry analysts view the merger as a strategic pivot for China's computing power ecosystem, transitioning from isolated breakthroughs to deep vertical integration. By consolidating resources, leveraging technological complementarities, and enhancing industrial chain synergies, the merged entity aims to accelerate innovation and scale, addressing key weaknesses while building on strengths.
Hygon, a leading domestic chip designer specializing in high-end CPUs and AI computing processors (DCUs), will absorb Sugon, a prominent high-performance computing and data center products manufacturer. Both are affiliated with the Chinese Academy of Sciences. Notably, Sugon currently holds a 27.96% stake in Hygon, making this a reverse merger where the “subsidiary” acquires the “parent” company—a rare structure that has attracted market attention.
As of the announcement, Sugon's market cap stood at roughly 90.6 billion yuan, while Hygon's was about 316.4 billion yuan. Post-merger, the combined company is expected to become a computing power powerhouse valued above 400 billion yuan, with potential for further growth.
In 2024, Hygon reported revenue of 9.16 billion yuan, up 52.4% year-over-year, with net profit reaching 1.93 billion yuan, a 52.9% increase. Gross margin was 63.7%, and net margin nearly 30%. Q1 2025 saw revenue of 2.4 billion yuan (+50.8% YoY) and net profit of 506 million yuan (+75.3%).
Sugon posted 13.15 billion yuan in revenue for 2024, down 8.4% YoY, but net profit rose 4.1% to 1.91 billion yuan. Q1 2025 revenue was 2.59 billion yuan (+4.3% YoY), with net profit increasing 30.8% to 186 million yuan.
The updated 2025 asset restructuring regulations explicitly encourage upstream and downstream mergers to boost resource allocation efficiency, industry concentration, and competitiveness. As the first notable case under these rules, the Hygon-Sugon merger signals Beijing's intent to push technological consolidation in the computing sector.
Both companies' management teams have a long history of collaboration and cultural alignment, which analysts say reduces integration risks and smooths the path ahead. Against ongoing overseas technology containment, the deal reflects a strong commitment to advancing China's domestic computing capabilities.
The merger is expected to generate significant technological synergies, combining Sugon's strengths in high-performance computing, storage, and cloud services with Hygon's expertise in core chip design. This integration will enhance the industry chain from chips to systems to cloud-based computing services, supporting large-scale adoption of domestic technologies in government, finance, telecom, and energy sectors.
By closing the loop—from chip design through system integration to computing power services—the combined company will reduce external dependencies and boost China's autonomous innovation capacity.
While chip and server manufacturers typically maintain upstream-downstream partnerships, this merger—where a chip maker also moves into server manufacturing—raises concerns among some server manufacturers about potential market conflicts.
However, the merged company's comprehensive ecosystem is viewed as critical for competing with global giants like Intel, AMD, and Nvidia, who dominate through their full-stack industry capabilities.
(Note: 1 USD equals about 7.25 yuan)
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