Semiconductor Manufacturing International Corporation (SMIC), China's largest dedicated semiconductor foundry, has agreed to acquire a 70% stake in specialty foundry LFoundry for about $65 million.

The deal is SMIC's first successful acquisition of an overseas-based manufacturer and will also move the company into the global automotive electronics market, according to SMIC.

LFoundry is an integrated circuit wafer foundry headquartered in Italy, which is owned by LFoundry Europe GmbH and Marsica Innovation S.p.A.

This acquisition will bring both companies additional room for business expansion. At present, SMIC's total capacity includes 162,000 8-inch wafers per month and 62,500 12-inch wafers per month, which represents a total 8-inch equivalent capacity of 302,600 wafers per month. LFoundry's capacity amounts to 40,000 8-inch wafers per month. Thus, by consolidating the entities, overall total capacity would increase by 13%; this combined capacity will provide increased flexibility and business opportunities for supporting both SMIC and LFoundry customers.

SMIC has a diversified technology portfolio, including applications such as radio frequency, connectivity, power management ICs, CMOS image sensors, embedded memory, MEMS, and others—mainly for the communications and consumer markets. Complementarily, LFoundry's key focus is primarily in automotive, security, and industrial related applications including CIS, smart power, touch display driver ICs, embedded memory and others.

"This will additionally expand our production scale and allows us to service the automotive IC market and for LFoundry to enter into China's consumer electronics market, thus bolstering our overall development and growth," said Dr. Tzu-Yin Chiu, CEO and executive director of SMIC.

In the first quarter of 2016, SMIC recorded profit for the 16th consecutive quarter with revenue of $634.3 million, an increase of over 24% year-on-year. In 2015, SMIC recorded annual revenue of $2.24 billion. In fiscal year 2015, LFoundry revenue reached €218 million.