Chinese supercomputer maker Sugon and chip developer Hygon call off merger plans

Core Viewpoint - The planned mega-merger between Chinese supercomputer maker Sugon and chip designer Hygon Information Technology has been called off, complicating China's efforts for tech self-sufficiency in semiconductors and high-performance computing [1]. Group 1: Merger Cancellation - The two companies announced the cancellation of merger talks due to significant changes in the market environment since the initial planning stages [2]. - They indicated that the conditions for implementing the major asset restructuring were not yet mature [2]. - Factors affecting their stock prices included changes in the domestic and international environment, the overall trend of the mainland share market, and shifts in the artificial intelligence industry's popularity [3]. Group 2: Implications of the Cancellation - By not merging, Hygon can continue as an independent chip supplier, serving the domestic server industry [4]. - Sugon can collaborate with other chip companies as a server manufacturer, maintaining its operational flexibility [4]. - The cancellation has dashed expectations for creating a major domestic ecosystem for advanced processors and high-performance servers [5]. Group 3: Financial Context - The proposed merger was valued at 116 billion yuan (approximately US$16.4 billion) [6]. - Since the announcement of the merger in late May, Sugon's shares increased by over 45%, while Hygon's stock surged by 60% [6]. - Following the announcement of the merger's cancellation, Sugon's shares fell by the daily limit of 10% in Shanghai, while Hygon's stock decreased by 0.4% [7].