Semiconductor Manufacturing International Corporation (SMIC) has inked a deal to acquire 70% of LFoundry for EUR49m (US$54m).

LFoundry is an integrated circuit wafer foundry headquartered in Italy, owned by LFoundry Europe (LFE) and Marsica Innovation (MI).

SMIC, LFE and MI will own 70%, 15% and 15% of the corporate capital of the target respectively.

“This also represents the mainland China IC foundry industry’s first successful acquisition of an overseas-based manufacturer, which marks a major step forward in internationalising SMIC; furthermore, through this acquisition, SMIC has formally entered into the global automotive electronics market,” said a SMIC statement.

As a semiconductor foundry in mainland China, in the first quarter of 2016, SMIC recorded profit for the 16th consecutive quarter with revenue of US$634.3m, an increase of more than 24% year-on-year.

In 2015, SMIC recorded annual revenue of US$2.24bn. In fiscal year 2015, LFoundry revenue reached EUR218m.

“The successful completion of the LFoundry acquisition agreement is an important step in our global strategy,” said SMIC CEO and executive director, Tzu-Yin Chiu.

“Both SMIC and LFoundry will mutually benefit from shared technology, products, human talents and complementary markets. 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.

“Through the acquisition, communication and cooperation in the semiconductor industry between China and Europe has been enhanced and contributes to the mutual success of the integrated circuit industry in both regions.”