Semiconductor Manufacturing International Corporation (SMIC), China’s largest wafer foundry, has cleared the final regulatory hurdle for a share-based acquisition of the remaining 49 per cent stake in its Beijing-based foundry unit, paving the way for what could become the largest merger and restructuring deal on Shanghai’s Star Market.

China’s securities regulator approved SMIC’s plan to issue 547.2 million A-shares to five shareholders of Semiconductor Manufacturing North China (Beijing) Corporation, or SMNC, according to an exchange filing published late on Thursday. The approval, valid for 12 months, allows China’s biggest contract chipmaker to proceed with the share issuance and related asset purchase procedures.

The planned transaction values the 49 per cent stake at 40.6 billion yuan (US$5.97 billion), according to SMIC’s registration filing. Upon completion, SMNC will become a wholly owned subsidiary of SMIC, which already holds 51 per cent of the company. The new shares will be issued at 74.20 yuan (US$10.91) apiece, with a 12-month lock-up period for the sellers.

The approval marks the last step in a regulatory process that began in August last year, when SMIC first disclosed the planned acquisition. The company announced the transaction price and preliminary plan on December 30. The deal was then accepted by the Star Market on February 25, and passed the exchange’s review on May 11.

SMIC is buying the stake from state-linked investors: the China Integrated Circuit Industry Investment Fund, known as the Big Fund, the Beijing Semiconductor Manufacturing and Equipment Equity Investment Centre, Beijing E-Town International Investment & Development, Zhongguancun Development Group and Beijing Industrial Investment. The China chip fund will receive the largest portion of the new shares, at 357.3 million.

SMNC, founded in 2013, focuses on 12-inch wafer foundry services and has been an important manufacturing base for SMIC in Beijing. The acquisition was expected to lift SMIC’s net profit and earnings per share, while leaving its core business unchanged, according to the company’s filing. On a pro forma basis, SMIC said from January to August 2025, its basic earnings per share would have risen from 0.49 yuan to 0.55 yuan if the transaction had been completed.