(Yicai Global) May 23 -- Shares of China's Ingenic Semiconductor surged after compatriot chip designer Will Semiconductor said it plans to spend CNY4 billion (USD601 million) to become the auto chip developer’s biggest shareholder.

After climbing as much as 17.1 percent, Ingenic’s stock price [SHA: 300223] closed 13 percent up at CNY95.96 (USD14.43) today. The Beijing-based company’s shares have still lost over a quarter of their value since the start of the year.

Will Semiconductor intends to buy no more than 50 million shares of Ingenic, or 10.4 percent of its outstanding share capital in the public market, it said in a statement yesterday. The Shanghai-based firm already owns about 5 percent of Ingenic. Forty percent of the funding will come from Will Semiconductor, and the rest from bank loans and other financing means.

The share purchase will benefit both companies, Will Semiconductor said. Ingenic's memory chips are renowned among automotive clients, while Will Semiconductor is a leader in the field of auto contact image sensors, which can provide complementary resources, it added.

Shares of Will Semiconductor [SHA: 603501] closed 1.1 percent higher today at CNY165.47 (USD24.90) each. Its stock is down almost 47 percent since the end of last year.

Established in 2005, Ingenic mainly researches, develops, and makes memory chips. Its current largest shareholder is Yitang Semiconductor Industry Investment Center, an investment vehicle of the Beijing Economic-Technological Development Area. It has a 12.6 percent stake.

Profits at both chip companies have soared amid the global chip shortage. Ingenic's net profit surged over 10-fold to CNY926 million (USD139.1 million) last year, while revenue more than doubled to CNY5.3 billion. Will Semiconductor's 2021 net profit jumped 65 percent to CNY4.5 billion on an almost 22 percent gain in revenue to CNY24.1 billion (USD3.6 billion).

Editor: Emmi Laine, Xiao Yi