On February 4, 2025, China's Ministry of Commerce announced on its official website that Illumina, Inc. and another U.S. company were added to the Unreliable Entity List, which was accused of "violating the principles of normal market transactions, interrupting normal transactions with Chinese enterprises, taking discriminatory measures against Chinese enterprises, and seriously harming the legitimate rights and interests of Chinese enterprises".

Founded in 1998 and headquartered in San Diego, California, Illumina is a global leader in the field of gene sequencing, with businesses covering oncology, genetic and infectious diseases, reproductive health and other fields, and its core products include high-throughput gene sequencers, gene chips, etc. According to the Prospective Industry Research Institute, Illumina once held 83.9% of the global gene sequencer market share. Illumina entered the Chinese market in 2005.

On February 5, 2025, Illumina issued a statement saying, "Since entering the Chinese market, Illumina has long served customers in the local market and is committed to advancing genomics to improve human health. As a global innovator in the field of gene sequencing, Illumina has always followed the principles of marketization and rule of law to carry out its global operations, and strictly abides by the laws and regulations of the countries or regions where the market is located, including China. ”

According to the decision of the Department of Commerce, has Illumina been taken such measures at this time? In an interview with China Business Daily, Illumina said: "We are further understanding the specific situation related to the announcement of the Ministry of Commerce of China and actively seeking solutions. At the same time, we will continue to spare no effort to serve our customers around the world and promote the sustainable development of global healthcare. In response to a question about what was involved in the company's alleged "violation of normal market trading principles", Illumina replied: "We have not received specific information about this decision, and the company is conducting a detailed assessment of the impact of the relevant matters and actively seeking solutions." ”

An industry insider told reporters that according to the financial report, Illumina's business in China accounted for about 9% of its global revenue. At present, it remains to be seen the subsequent impact of the company's inclusion in the list. "However, it is certain that the process of domestic substitution in the field of gene sequencers will be further accelerated, which is good for MGI (688114. SH). ”

MGI is a direct competitor to Illumina. According to MGI's 2024 semi-annual report, for the gene sequencer market, Illumina and Thermo Fisher occupy a large market share in gene sequencing equipment and reagent consumables due to the early start of genetic testing technology in European and American countries. MGI said that the company's future market share further increase mainly depends on entering markets such as the United States and Europe and continuing to increase its market share. "However, in these regions, gene sequencer companies such as Illumina and Thermo Fisher have established good localized ecological cooperation and formed user habits after more than ten years of development, and the company is also affected by geopolitics and faces certain challenges in business development."

It is worth noting that in the past few years, MGI and Illumina have been in constant dispute over patent issues. Until July 2022, MGI announced that it had reached a settlement with Illumina for all pending lawsuits in the United States. MGI said that the two parties agreed that in the next three years, they will not sue each other and their customers for patent infringement and violation of U.S. antitrust laws or unfair competition in the United States, and will not claim for possible losses caused by existing sequencing platforms. MGI has not responded to Illumina's inclusion in the list of unreliable entities by the Ministry of Commerce.

According to the 2024 performance forecast, MGI expects to achieve a net profit attributable to the parent company of -670 million yuan to -554 million yuan, and a non-net profit of -730 million yuan to -603 million yuan. MGI said that during the reporting period, due to the impact of the macro environment, geopolitics, market competition and other aspects, the difficulty of market expansion increased, and the company actively adjusted its marketing strategy and increased market expansion efforts, resulting in an increase in related sales expenses. At the same time, the fluctuation of foreign currency exchange rates such as US dollars and euros led to a year-on-year increase in foreign exchange losses arising from the company's foreign currency monetary items. In addition, after preliminary calculation, the total asset impairment loss and credit impairment loss recognized by the company in 2024 will be 97.7545 million yuan.