According to the disclosure, Hygon Information plans to absorb and merge Sugon through A share swap by issuing A-share stocks to all A-share swap shareholders of Sugon, and raise funds by issuing A-share stocks. Starting from May 26th, the A-share stocks of the two companies have been suspended from trading. It is expected that the suspension period will not exceed 10 trading days.
On the evening of May 25th, Hygon Information and Sugon simultaneously issued announcements, stating that they were planning a major asset reorganization. According to the disclosure, Hygon Information plans to absorb and merge Sugon through A share swap by issuing A-share stocks to all A-share swap shareholders of Sugon, and raise funds by issuing A-share stocks. Starting from May 26th, the A-share stocks of the two companies have been suspended from trading. It is expected that the suspension period will not exceed 10 trading days.
The birth of a new giant
Both Hygon Information and Sugon hold significant positions in China's information industry. Hygon Information focuses on the design of core chips such as domestic architecture cpus and DCU. Its products are widely used in data centers of multiple industries including finance, telecommunications, and energy, as well as in cutting-edge fields such as big data processing and artificial intelligence. It was listed on the STAR Market of the Shanghai Stock Exchange on August 12, 2022. Sugon has been deeply engaged in high-end computing, storage, cloud computing and other fields for many years. IT has a complete IT infrastructure product line and a complete computing industry ecosystem. It was listed on the main board of the Shanghai Stock Exchange on November 6, 2014.
As of the market closure on May 23rd last week, the share price of Sugon was 61.90 yuan per share, with a total market value of 90.6 billion yuan. The share price of Hygon Information is 136.13 yuan per share, with a total market value of 316.4 billion yuan, ranking first in market value on the STAR Market.
As of December 31, 2024, the top two shareholders of Hygon Information were Sugon and Chengdu State-owned Assets, holding 27.96% and 17.00% of the shares respectively. Moreover, the actual controllers of both companies are the Institute of Computing Technology, Chinese Academy of Sciences. This close equity relationship and common "origin" have laid a solid foundation for this merger. The related-party transactions between Sugon and Hygon Information are also quite frequent. In 2022, 2023, and 2024, the transaction amounts between Sugon and Hygon Information were 2.912 billion yuan, 2.474 billion yuan, and 3.689 billion yuan respectively, accounting for a significant proportion of Hygon Information's revenue.
Once the merger is successful, the chip technology advantages of Hygon Information, combined with Sugon's profound accumulation in hardware fields such as servers and storage devices, will be able to create a more complete "chip - hardware - software" solution and build a full-chain capability of "chip + complete machine + computing power service". For instance, the DCU performance of Hygon's deep computing series has reached 70% of that of NVIDIA's A100, and the silicon cube liquid-cooled server cluster independently developed by Sugon can increase GPU utilization by over 30%. The combination of the two, through the full-chain optimization of chips, algorithms, and heat dissipation, is expected to reduce the cost of AI training computing power by 40% and shorten the inference latency by 50% within three years after the merge. Greatly enhance the competitiveness of products and accelerate the large-scale application of domestic chips.
Analysis institutions predict that the market share of domestic servers of the newly merged company is expected to significantly exceed the current 15%, and its market share of AI chips is expected to break through 50% by 2027, making it the undisputed leading enterprise in China's computing power industry.
In addition, Sugon has set up computing power nodes in western hubs such as Ningxia and Guizhou, while Hygon chips provide a foundation for domestic computing power. After the merger, while promoting the domestic "East Data West Computing" project, its successful experience and technical model are expected to be expanded to countries along the "Belt and Road" and others. By building data centers overseas and providing computing power services, China will export its computing power industry advantages, drive related technologies, products and services to go global, enhance the position of China's information industry in the global industrial chain, and gradually build a global computing power industry ecosystem with China at its core.
Promote industry consolidation
At present, the information technology industry is in a critical period of rapid transformation and development. New technologies such as artificial intelligence, cloud computing and big data are constantly emerging, and market competition is becoming increasingly fierce. From a policy perspective, this merger is also the first absorption merger transaction between listed companies after the revision and release of the "Administrative Measures for the Major Asset Reorganization of Listed Companies", which is fully in line with the policy encouragement direction and reflects the regulatory authorities' support for enterprises to optimize resource allocation and enhance competitiveness through reorganization.
It can be foreseen that as the market share expands and the technological strength improves, the new company's say in the domestic industrial chain will be significantly enhanced. In the procurement process, with the advantage of large-scale procurement, it is possible to reduce the procurement costs of raw materials and components and increase the profit margin. In terms of standard setting, it will have greater influence and promote the establishment of an industrial ecosystem dominated by Chinese enterprises. For instance, in the standards for data center construction, Sugon leads in liquid-cooled data center technology, with a PUE value as low as 1.04. After the merger, the related advantageous technologies and standards can be promoted, guiding the industry to develop in a green and efficient direction.
In terms of software ecosystem adaptation, the new company can leverage its own influence to promote better adaptation between domestic basic software such as UnionTech Software and Kylin operating System and hardware, thereby facilitating the development of the domestic software industry. In the chip design stage, the new company can deepen cooperation with domestic enterprises such as SMIC and JCET in advanced manufacturing processes and packaging and testing, thereby enhancing the overall level of domestic chip manufacturing.
At the application level, it can provide cloud service providers such as Baidu and Alibaba with a more autonomous and controllable computing power foundation. For instance, in new data center construction projects, the new company can integrate upstream and downstream resources to provide cloud service providers with one-stop solutions ranging from chips, servers to software systems, thereby enhancing the efficiency and quality of project delivery. In the fields of artificial intelligence and cloud computing, with the powerful computing power of Hygon chips and the equipment and service capabilities of Sugon, more efficient and stable computing power support can be provided for enterprises, helping them gain the upper hand in digital transformation.
This merger case may also prompt other domestic manufacturers to accelerate their integration pace, including Huawei's Kunpeng ecosystem and the Phytium CPU camp, all of which may enhance their competitiveness, improve their technological level and market share through similar mergers and acquisitions, cooperation and other means.
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