Zhongwei Semiconductor plans to invest 160 million yuan to increase its capital in Zhuhai Boya, which has been incurring losses for three consecutive years.

On March 22, SMIC Microelectronics (SH688380, stock price 45.36 RMB, market value 18.16 billion RMB) announced that, based on strategic planning considerations and the company’s need to accelerate the development of its storage chip business, the company plans to use 160 million RMB of its own funds to increase its capital in Zhuhai Boya Technology Co., Ltd. (hereinafter referred to as “Zhuhai Boya”). After the transaction is completed, the company will hold a 20% stake in Zhuhai Boya, which will become an associated company of the company.

The announcement shows that Zhuhai Boya was established in 2014 and is a chip design company founded with the participation of overseas returnee doctors. It mainly focuses on the research, design, promotion, and sales of flash storage chips (NOR Flash). The company adopts a fabless, lightweight asset operation model and has successfully launched NOR Flash products based on ETOX and SONOS process structures ranging from 65nm to 40nm, used in consumer electronics, industrial control, communication equipment, automotive electronics, and other fields.

However, a reporter from Daily Economic News noted that, in terms of revenue scale and market share, Zhuhai Boya still lags behind industry leaders such as Winbond, GigaDevice, and Macronix. Financial data shows that from 2023 to 2025, Zhuhai Boya is expected to achieve revenues of approximately 180 million RMB, 170 million RMB, and 197 million RMB, respectively, with gross profit margins of -14.24%, 4.10%, and 12.39%. Overall, Zhuhai Boya is relatively small in scale and has a gross profit margin below the industry average.

In terms of profitability, Zhuhai Boya has been in a loss for three consecutive years from 2023 to 2025. Specifically, net losses in 2024 and 2025 are expected to be 47.9988 million RMB and 7.1456 million RMB, respectively.

Image source: SMIC Microelectronics announcement

Despite the pressure on the target company’s performance, SMIC Microelectronics stated in the announcement: “With the recovery of the storage chip market in 2026, Zhuhai Boya’s revenue is expected to increase significantly, and gross profit margins will rise rapidly. Once the company obtains sufficient operating funds, it is expected to enter a period of rapid growth, with shipment volumes, revenue scale, and gross profit margins continuing to climb, achieving profitability.”

Regarding the impact of this investment on the company, SMIC Microelectronics said in the announcement: “The company is a chip design company centered on MCUs (microcontroller units), striving to provide one-stop integrated solutions for intelligent control. Earlier this year, the company launched its first SPI NOR Flash, entering the storage product market. This investment in Zhuhai Boya is part of the company’s efforts to further improve and enhance its industrial layout, which will promote the company’s business structure and industrial synergy.”

SMIC Microelectronics also emphasized that this external investment is made using the company’s own funds and is a decision made under the premise of ensuring the normal development of its main business. It will not have a significant impact on the company’s financial condition and operating results.

From its own operational perspective, SMIC Microelectronics recently released its 2025 annual report, showing that the company achieved approximately 1.122 billion RMB in revenue for 2025, a year-on-year increase of 23.09%; net profit attributable to the parent was about 284 million RMB, a year-on-year increase of 107.68%.

Image source: SMIC Microelectronics 2025 Annual Report

Regarding the reasons for the performance changes, SMIC Microelectronics explained that: first, benefiting from the company’s continuous R&D investment over the past few years and its product layout in high-end application fields, as well as ongoing product iteration, new product promotion, sales, and comprehensive service capabilities, the shipment volume of automotive-grade chips and industrial control chips increased rapidly compared to the previous year; second, the promotion of new products and product iteration improved product competitiveness and gross profit margins; third, the long-term holding of stock in ElecTech chips saw a rise in stock price, leading to a significant increase in fair value change gains and losses.

(Article source: Daily Economic News)