On June 6, 2025, Goke Microelectronics announced that it intends to acquire a 94.366% stake in SMIC Ningbo through the issuance of shares and cash payments. The acquisition has attracted a lot of attention from the industry, not only because of the size of the transaction and the core technologies involved, but also because it may mark an important starting point for the transformation of Chinese Fabless enterprises to the IDM model (integrated device manufacturing). In this article, China Exportsemi will deeply analyze the industrial significance and future impact of this merger and acquisition from the perspectives of transaction overview, technology synergy, market structure, cost optimization, domestic substitution and potential risks.
1. Transaction overview: the starting point of CAS Micro Transformation IDM
Founded in 2016 and jointly funded by SMIC and Ningbo Government Industry Fund, SMIC Ningbo focuses on special processes such as RF front-end, MEMS, and BCD high-voltage analog devices, and is one of the few foundries in China with both 6-inch and 8-inch wafer production lines. Its 8-inch BAW (bulk acoustic wave) filter process has reached the leading level in China, and it has been supplied to the flagship products of domestic leading mobile phone brands in batches from 2024, effectively breaking the market pattern monopolized by Qorvo and Broadcom in the United States for a long time.
According to the announcement released by CAS Micro, SMIC Ningbo's revenue in 2023 will be 213 million yuan, with a loss of 843 million yuan, its revenue will increase to 454 million yuan in 2024, and the loss will narrow to 813 million yuan, and in Q1 2025, it will achieve a revenue of 108 million yuan, and the loss will be further reduced to 15 million yuan. Although not yet profitable, the operating inflection point is expected to be achieved in the coming years, benefiting from the release of capacity and the dilution of fixed costs.
For CAS Micro, which is mainly engaged in storage, video codec and communication chip design, this merger and acquisition is not only a business expansion, but also the core action of strategic transformation: from a single Fabless chip design company to an IDM enterprise with manufacturing capabilities to achieve vertical integration.
Figure: CAS Micro announced that it intends to acquire 94.366% of SMIC Ningbo's equity
2. Technical collaboration: design + manufacturing two-wheel drive
CAS Micro and SMIC Ningbo have a natural complementary relationship in the industrial chain. The former has decades of experience in SoC design, video security chips, and communication chips, while the latter has a solid technical foundation in BAW filters, MEMS, and power device manufacturing processes.
In the field of RF front-end, CAS Micro can package the self-developed communication chip and SMIC Ningbo BAW filter into an integrated solution to provide high-performance and high-reliability module products for 5G/6G high-frequency bands, and solve the "bottleneck" of the RF module end in China Issue. At present, the global market demand for BAW filters is still dominated by Broadcom and Qorvo, and the domestic substitution rate is less than 10%. After this merger, CAS Micro is expected to increase the localization rate to more than 20% by 2026 with synergistic advantages.
In the field of MEMS, SMIC Ningbo has basic process platforms such as inertial sensors and pressure sensors, combined with the system-level integration capabilities of CAS Micro in edge computing and IoT chips, which can quickly promote the application and popularization of domestic MEMS sensors in automotive electronics, smart wearables and industrial control.
3. Market expansion: industrial synergy releases scale effect
The acquisition will enable CAS Micro to achieve deep integration at the customer level. At present, CAS Micro products are widely used in smart TVs, set-top boxes, security monitoring, enterprise network communication and other scenarios, and maintain cooperation with many brand end customers and communication equipment manufacturers. SMIC Ningbo has entered the supply chain of a domestic mobile phone head customer in the field of BAW filters, providing RF components for its flagship products in 2024.
Through collaborative sales and joint customer development, CAS Micro can realize the integrated supply of design and manufacturing to enhance customer stickiness. More importantly, the IDM model can provide a rapid response mechanism integrating "design-manufacturing-testing-packaging", improve delivery efficiency, and enhance overseas market expansion capabilities. In the context of the rapid growth of the Internet of Things and the automotive electronics market, product systematization and platformization have become a trend, and the transformation of CAS Micro can open up a broader mid-to-high-end market space for it.
4. Cost and supply chain advantages: the realistic return of the IDM model
From the analysis of cost structure, the IDM model has the natural advantages of optimizing the manufacturing process, improving the yield and controlling the risk. In the past two years, against the backdrop of tight global foundry capacity, Fabless companies that rely on outsourcing have generally encountered the dual challenges of rising prices and delayed delivery.
Through this acquisition, CAS Micro not only obtains the control of manufacturing capacity, but also realizes the rapid closed-loop of product research and development, trial production and mass production through its own wafer factory, reducing external coordination links. While ensuring product consistency, the internal pricing mechanism can effectively reduce manufacturing costs and improve gross profit structure.
In addition, under the guidance of the country's policy of promoting "supply chain security and independent controllability", its own manufacturing capacity can effectively avoid the uncertainty caused by overseas sanctions and technological blockades.
5. Domestic substitution: the strategic significance is highlighted
In the context of rising global geopolitical risks and intensifying technology blockade, it has become a consensus for domestic semiconductor companies to promote technological independence and endogenous growth of the supply chain. The acquisition of SMIC Ningbo is not only a strategic upgrade of the company, but also an important part of the country's promotion of the improvement of the semiconductor industry chain and the localization of key devices.
Especially in the field of BAW filters and MEMS sensors, the overall dependence on imports is still high. Taking BAW filters as an example, the global market size will reach $6.9 billion in 2023, and domestic enterprises will account for less than 5% of the market. If SMIC Ningbo achieves large-scale mass production through follow-up production line optimization and cost control, it will become a key breakthrough to break down overseas technical barriers.
Through this integration, CAS Micro can not only fill the technical shortcomings in the field of high-frequency RF devices in China, but also provide complete chip solutions in key scenarios such as national 5G communications, vehicle-grade sensors, and industrial Internet of Things, and accelerate the process of domestic substitution.
6. Challenges and risks: Transformation is not an easy road
Despite the promising prospects of M&A, the risks of transforming the IDM model cannot be ignored.
The first is the integration challenge. The transformation of a design enterprise into a manufacturing enterprise not only tests the organizational management ability, but also requires interdisciplinary talent collaboration. The retention and integration of SMIC Ningbo's original team, and the synergy mechanism between process R&D and market demand, all require the establishment of a long-term and stable integration framework in the future.
The second is financial pressure. According to the announcement, SMIC Ningbo is currently in a state of continuous loss. After the consolidated statements, the net profit indicators of CAS Micro will be affected, and the debt ratio may rise. If the follow-up production line ramp-up is less than expected, it will put pressure on the company's cash flow.
Finally, there is the risk of market competition. In the field of RF front-end and MEMS sensors, the global giants still maintain a first-mover advantage in technology and market. How to establish competitive barriers through product performance and cost advantages within a limited time window will determine the success or failure of this merger.
7. Conclusion: Can CAS Micro open a new chapter in the domestic IDM model?
From the perspective of the industry, the acquisition of SMIC Ningbo by CAS Micro is not only a capital integration between enterprises, but also a strategic turning point for the domestic semiconductor industry to move from "design-driven" to "design + manufacturing collaboration". Behind it is not only about the leap in the competitiveness of enterprises, but also reflects the trend of in-depth development of China's semiconductor industry chain.
Despite the challenges, this strategic transformation has undoubtedly expanded the voice of Chinese chip companies in the global market, and also set an example for promoting the localization of core devices. The road to IDM may be long and difficult, but driven by policy support, market demand release and technological progress, this step of Guoke Micro is likely to become a key step in the rise of domestic semiconductors.
