Intended Audience
- Researchers and scientists with a working knowledge of next-generation sequencing (NGS), genomics, and related technologies.
- Readers interested in sequencing technologies beyond Illumina, including MGI Tech, Complete Genomics, and BGI.
- Those seeking to understand the technological innovation, intellectual property, corporate strategy, capital structure, and international competition shaping the genomics industry.
Executive Summary
- MGI Tech (华大智造) was established in 2016, building on sequencing technologies acquired by BGI through its 2013 purchase of the US company Complete Genomics. Its origins lie in BGI's ambition to move beyond being a large-scale user of sequencing instruments and become a manufacturer of sequencing technology.
- Using its DNA nanoball-based DNBSEQ technology, MGI developed a portfolio ranging from low-throughput to ultra-high-throughput sequencers, while expanding into laboratory automation, clinical applications, and public health.
- In 2022, MGI reached a comprehensive settlement in its major patent dispute with Illumina and completed its initial public offering on the Shanghai Stock Exchange's STAR Market. However, the company has faced profitability challenges since 2023.
- In 2026, MGI integrated the CycloneSEQ long-read sequencing business and STOmics-related spatial omics operations, accelerating its transformation from a short-read sequencing company into a broader multi-omics instrument provider.
- MGI's history illustrates how technology acquisition, instrument engineering, intellectual property strategy, capital investment, and geopolitical risk intersect in the modern genomics industry.
1. Introduction: What Kind of Company Is MGI Tech?
MGI Tech (深圳华大智造科技股份有限公司, Shanghai Stock Exchange: 688114) is a life sciences instrument manufacturer headquartered in Shenzhen, China.
Its history is not simply the story of a Chinese startup entering the sequencing instrument market.
Rather, it is the story of how BGI, which had grown into one of the world's largest genome sequencing service providers, acquired a US technology company to internalize sequencing technology, established an independent instrument manufacturer, and challenged the global sequencing market.
Five major transitions help explain this development.
1.1. From Sequencing User to Instrument Manufacturer (2013–2016)
BGI acquired the US company Complete Genomics, transforming itself from an organization that operated large numbers of instruments supplied by external manufacturers into a group capable of developing and manufacturing sequencing instruments.
1.2. Commercialization and Product Diversification (2016–2021)
MGI commercialized its DNA nanoball (DNB) technology across sequencing platforms with different throughput capacities for research and clinical applications.
It also expanded into library preparation, sample processing, and laboratory automation.
1.3. Patent Disputes with Illumina and Entry into the US Market (2019–2023)
Patent litigation with Illumina, the dominant sequencing instrument manufacturer, constrained MGI's commercial expansion.
A comprehensive settlement in 2022 established a path for MGI to sell certain products in the United States. [4]
1.4. Public Listing and Business Expansion (2022–2025)
MGI listed on the STAR Market of the Shanghai Stock Exchange in 2022 and expanded its international sales network.
However, substantial investments in research and development, distribution, and customer support contributed to increasing pressure on profitability. [5]
1.5. Transformation into a Multi-Omics Instrument Company (2025–2026)
MGI expanded beyond DNBSEQ short-read sequencing into long-read sequencing, spatial omics, and AI-enabled laboratory automation.
In 2026, it also completed an internal group restructuring that brought nanopore sequencing and spatial omics businesses into the publicly listed company. [7]
An important point is that MGI's competitive position cannot be explained simply by its ability to offer lower-priced sequencers.
Its foundations include the technologies developed over many years by Complete Genomics, BGI's experience operating sequencing at enormous scale, and the vertical integration of instruments, reagents, and laboratory automation.
At the same time, technological competitiveness and financial success must be evaluated separately.
Although MGI has grown into an international instrument manufacturer, it recorded net losses for three consecutive years from 2023 through 2025.
Even after resolving some of its intellectual property disputes, the company continues to face challenges involving US–China relations, concerns about human rights and the use of genomic data, and procurement risks for potential customers.
2. Before MGI: Why Did BGI Need Its Own Sequencing Technology? (1999–2013)
2.1. BGI Began as a Massive User of Sequencing Instruments
Understanding MGI's origins requires examining the history of its parent corporate group, BGI Group (华大集团).
BGI was founded in 1999 in connection with China's participation in the Human Genome Project.
One of its central figures was Wang Jian (汪建), who would later become chairman of MGI.
From the late 2000s through the early 2010s, BGI rapidly expanded its sequencing service business by acquiring and operating large numbers of NGS instruments from external manufacturers, particularly Illumina.
This business model offered substantial advantages.
By operating many sequencers at high utilization rates, BGI could benefit from economies of scale and generate sequencing data at relatively low cost.
However, the model also created several structural disadvantages.
- BGI depended on external manufacturers for sequencing instruments, flow cells, and reagents.
- It could not independently control the sequencing chemistry that determined much of the cost per run.
- Improvements in throughput, read length, and reaction chemistry depended on the product roadmaps of its suppliers.
- A substantial portion of the economic value generated by sequencing remained with instrument and consumables manufacturers rather than sequencing service providers.
In other words, BGI generated enormous demand for sequencing while remaining dependent on external companies for the technologies required to satisfy that demand.
Reducing this dependence was arguably the most important business motivation behind the establishment of MGI.
BGI's ambitions already extended beyond contract sequencing into clinical testing, agriculture, and bioinformatics.
These broader ambitions also help explain why acquiring control over the underlying sequencing technology was strategically attractive.
2.2. The Decisive Turning Point: Acquisition of Complete Genomics in 2013
Complete Genomics was founded in Silicon Valley in 2006.
The company developed a proprietary high-throughput sequencing technology using DNA nanoballs and initially focused primarily on providing whole-genome sequencing services.
On March 18, 2013, BGI completed its acquisition of Complete Genomics. [1]
The principal transaction terms were as follows.
| Item | Details |
|---|---|
| Acquirer | BGI-Shenzhen |
| Target | Complete Genomics, then listed on NASDAQ |
| Completion date | March 18, 2013 |
| Acquisition price | US$3.15 per share, all cash |
| Transaction value | Approximately US$117.6 million |
| Post-acquisition plan | Continue operations as a US subsidiary |
According to documentation filed with the US Securities and Exchange Commission, Clifford Reid, then CEO of Complete Genomics, was expected to remain CEO following the acquisition. [1]
2.3. Why Complete Genomics?
The acquisition had at least three important implications.
First, BGI obtained a sequencing architecture that differed from Illumina's technology.
Complete Genomics possessed proprietary technologies based on DNA nanoballs and high-density arrays.
Rather than simply attempting to replicate existing Illumina instruments, BGI acquired an alternative technological foundation.
Second, BGI gained access to intellectual property and specialized expertise essential for becoming an instrument manufacturer.
Mass production of NGS instruments requires the integration of reagent chemistry, surface science, optics, fluidics, image processing, base calling, and manufacturing quality control.
The acquisition provided access to an organization that had already developed expertise across these areas.
Third, BGI retained a technological and research-and-development base in the United States.
By maintaining Complete Genomics as a US operation, BGI could combine advanced sequencing technology developed in the United States with engineering, manufacturing, and large-scale operational capabilities in China.
However, the subsequent development of MGI products should not be interpreted as a simple one-way transfer of technology from the United States to China.
Commercializing sequencing instruments required substantial contributions from BGI's engineering teams, manufacturing capabilities, and operational experience.
3. The Technical Foundation: What Did DNBSEQ Change?
Understanding MGI's development requires examining the technical architecture of DNBSEQ.
3.1. How DNBSEQ Works
The core principles of MGI's short-read sequencing platforms can be summarized in five steps.
-
Circular DNA library formation
DNA fragments are prepared with adapters and circularized. -
Rolling-circle amplification (RCA)
Circular templates are amplified to generate long DNA molecules containing repeated copies, which form DNA nanoballs. -
High-density array loading
DNA nanoballs are deposited onto a patterned array. -
Sequencing chemistry, including cPAS
Sequence information is obtained through successive sequencing cycles. -
Image analysis and base calling
Optical or other detection signals are processed to determine nucleotide sequences.
A simplified workflow is shown below.
DNA fragmentation and adapter ligation
↓
Circular DNA library formation
↓
Rolling-circle amplification
↓
DNA nanoball formation
↓
High-density loading onto a patterned array
↓
Nucleotide detection using sequencing chemistry
↓
Image analysis and base calling
This schematic is intended to explain the general principles rather than reproduce the exact chemistry or detection process of every DNBSEQ instrument.
3.2. How Does DNBSEQ Differ from Illumina's Approach?
One important architectural distinction is that, unlike Illumina's bridge amplification, DNA nanoball amplification primarily occurs in solution before the amplified DNA is loaded onto a flow cell.
This approach offers several potential technical advantages.
- It reduces dependence on amplification reactions occurring directly on the flow-cell surface.
- It facilitates the preparation of relatively uniform DNA clusters.
- It is well suited to high-density array configurations.
However, it also introduces challenges associated with DNA circularization and nanoball preparation.
Importantly, DNBSEQ does not refer to a single sequencing chemistry.
Instead, it represents a family of technologies encompassing DNA nanoball preparation, array structures, detection systems, and multiple sequencing chemistries.
The chemistry used in early Complete Genomics platforms is not identical to that used in contemporary MGI products.
These technologies have undergone substantial modification and diversification during commercialization.
The technical continuity and distinctions among modern short-read sequencing approaches are discussed in reviews of sequencing technologies. [3]
3.3. How the Technology Shaped MGI's Business Model
DNBSEQ provided MGI with three important competitive capabilities.
First, MGI could design sequencing systems with different cost and throughput characteristics using its own technology stack.
Second, it could develop low-, medium-, and high-throughput instrument families from a shared technological foundation.
Third, it could establish recurring revenue streams through proprietary sequencing reagents and flow cells, rather than relying solely on instrument sales.
Thus, DNBSEQ became more than a sequencing technology.
It provided the foundation for MGI's commercial business model.
4. The Evolution of MGI's Products and Businesses (2016–2026)
MGI was formally established in 2016.
However, the origins of its products and technologies predate that establishment.
The company is best understood as the commercialization and organizational continuation of technologies developed within BGI and Complete Genomics.
4.1. Timeline of Major Product Developments
| Period | Products or developments | Strategic significance |
|---|---|---|
| 2015 | BGISEQ-500, Revolocity | Early commercialization of sequencing instruments within the BGI group |
| 2016 | Establishment of MGI, BGISEQ-50 | Formalization of the sequencing instrument business |
| 2017 | MGISEQ-200 / 2000, MGISP-100 | Expansion into medium- and high-throughput sequencing and automation |
| 2018–2019 | DNBSEQ-T7 and related platforms | Entry into large-scale sequencing markets |
| 2020 | Expansion of automated nucleic acid extraction and sample processing | Broader clinical and public health applications during COVID-19 |
| 2021–2022 | Expansion of G-series, E-series, and sequencing chemistries | Broader range of sequencing scales and applications |
| 2023 | DNBSEQ-T20×2, G99 | Greater emphasis on both ultra-high-throughput WGS and rapid, small-scale sequencing |
| 2024 | CycloneSEQ nanopore systems, G400-ER, and related products | Expansion into long-read sequencing |
| 2025 | New-generation sequencers and AI-related technologies | Increased emphasis on speed and intelligent laboratory systems |
| 2026 | Long-read sequencing, spatial omics, AI laboratories, and tissue analysis | Transformation toward a comprehensive multi-omics instrument company |
MGI's corporate overview and product materials provide additional information about its evolving portfolio. [2]
4.2. Representative Sequencing Platforms
MGISEQ-2000 / DNBSEQ-G400: Medium- to High-Throughput Sequencing
These platforms serve a broad range of research applications.
They support workflows such as whole-genome sequencing (WGS), whole-exome sequencing (WES), RNA-seq, and metagenomics.
They have been important products in MGI's efforts to expand its international customer base.
DNBSEQ-T7: High-Throughput Sequencing
The DNBSEQ-T7 is designed for large-scale genomic analysis and processing substantial numbers of samples.
Its capabilities align closely with the requirements of large sequencing centers and high-volume genomics operations such as those developed within the BGI ecosystem.
DNBSEQ-T20×2: Ultra-High-Throughput Sequencing
Announced in 2023, the DNBSEQ-T20×2 represents MGI's expansion into ultra-high-throughput sequencing.
According to the manufacturer, it can generate up to 72 Tb of sequencing data per run using PE150 sequencing.
The system is designed for extremely large-scale whole-genome sequencing.
CycloneSEQ G400-ER: Nanopore-Based Long-Read Sequencing
The CycloneSEQ G400-ER uses a technological architecture distinct from DNBSEQ.
It targets applications such as structural variant analysis, genome assembly, and long-read RNA analysis.
4.3. 2016–2019: Building a Product Portfolio to Compete with Illumina
A major change during this period was MGI's transition from having a usable sequencing technology to offering instruments suitable for different customer requirements.
In the NGS market, instrument selection depends on more than sequencing cost.
Important considerations include instrument price, sample throughput, required read counts, run time, reagent availability, maintenance, and technical support.
By developing multiple sequencing platforms, MGI could address customers ranging from small laboratories to major genome centers.
The introduction of automation systems, including the MGISP series, also enabled MGI to offer broader workflows rather than standalone sequencing instruments.
This included elements of library preparation, sample processing, and sequencing.
4.4. 2020–2021: COVID-19 and the Expansion of Laboratory Automation
The COVID-19 pandemic significantly affected MGI's business.
Large-scale PCR and nucleic acid testing required automated extraction, sample dispensing, and reagent preparation.
MGI expanded its portfolio of nucleic acid extraction instruments, sample-handling systems, and related consumables.
During this period, its products were used in public health settings requiring large-scale infectious disease testing.
This accelerated the company's transition from a sequencing instrument manufacturer toward a broader provider of life sciences laboratory equipment.
However, demand generated during the pandemic was not necessarily sustainable.
When assessing MGI's later financial performance, it is important to distinguish temporary COVID-19-related demand from recurring demand for sequencing instruments and consumables.
4.5. 2023: The DNBSEQ-T20×2 and the "$100 Genome"
In February 2023, MGI announced the DNBSEQ-T20×2.
According to the company, the system could generate up to 72 Tb per run using PE150 sequencing and was designed to reduce the sequencing cost per human genome to below US$100.
This product represents an important element of MGI's strategy.
Rather than focusing only on genomic studies involving hundreds or thousands of samples, the company sought to position its technology as infrastructure for population-scale WGS, national genome projects, and large medical cohorts.
However, the "$100 genome" requires careful interpretation.
It generally refers to sequencing costs under specified operating conditions.
It does not mean that the entire end-to-end clinical WGS workflow—including sample collection, DNA extraction, library preparation, quality control, data storage, analysis, clinical interpretation, and instrument depreciation—can necessarily be completed for less than US$100.
Furthermore, ultra-high-throughput systems generally require high utilization rates to approach the manufacturer's advertised cost per base.
If a laboratory cannot consistently supply enough samples to operate the instrument near its intended capacity, its actual sequencing economics may be considerably less favorable.
4.6. 2024–2026: From Short Reads to "SEQ ALL"
One of MGI's most significant recent strategic changes is its effort to become a company with multiple sequencing technologies rather than simply improving DNBSEQ.
CycloneSEQ, a nanopore sequencing technology, is central to this expansion.
Long-read sequencing is especially valuable for applications that are difficult to address using short reads alone, including structural variant detection, repetitive regions, haplotype phasing, genome assembly, and RNA isoform analysis.
MGI has introduced the concept of "SEQ ALL," combining DNBSEQ for short-read sequencing and CycloneSEQ for long-read applications.
Its 2026 product materials identify three major areas: SEQ ALL, Generative Lab Intelligence (GLI), and Multi-Omics. [2]
From a business perspective, moving into long-read sequencing involves much more than adding another instrument.
Long-read workflows require different approaches to sample quality, extraction methods that preserve long DNA molecules, base calling, and downstream analysis.
MGI must therefore commercialize an additional technological architecture while leveraging its existing strengths in instrumentation, reagents, and automation.
The company has also expanded into spatial omics, tissue image analysis, multiplex fluorescence imaging, and AI-enabled laboratory automation.
These developments suggest a transition from selling genome sequencing instruments toward providing integrated laboratory infrastructure capable of generating and analyzing multiple types of molecular information.
5. Capital Structure: From a BGI Technology Business to a Publicly Listed Company
MGI's capital history can be divided into three major stages.
5.1. Stage One: Technology Acquisition and Separation of Business Functions
Following its establishment in 2016, MGI developed as the corporate entity responsible for instrument development and manufacturing activities originating within BGI.
The broader BGI group can be summarized conceptually as follows.
| Company or business | Principal role |
|---|---|
| BGI Group | Corporate group associated with Wang Jian |
| BGI Genomics and related entities | Genomic analysis services, testing, and medical applications |
| MGI Tech | Instruments, reagents, sequencing technologies, and laboratory automation |
| Complete Genomics | Acquired by BGI in 2013 and subsequently became an important US technology operation within MGI |
This is a simplified representation of the business structure.
It does not imply that BGI Genomics and MGI Tech are direct parent and subsidiary companies.
Their precise direct and indirect ownership relationships have also changed over time.
From BGI's perspective, separating genomic testing and analysis services from instrument and reagent manufacturing had a clear business rationale.
Manufacturing and service businesses differ in capital requirements, research and development timelines, margins, customer relationships, and competitive dynamics.
For MGI to grow as an independent instrument supplier, it also needed to sell sequencers to organizations that might compete with BGI's own sequencing service businesses.
Expanding its customer base beyond the BGI group was therefore essential.
5.2. Stage Two: The 2022 Initial Public Offering
On September 9, 2022, MGI was listed on the STAR Market of the Shanghai Stock Exchange.
The major offering terms were as follows.
| Item | Value |
|---|---|
| Listing date | September 9, 2022 |
| Offering price | RMB 87.18 per share |
| New shares issued | 41.32 million |
| Approximate percentage of share capital issued | 10% |
| Gross proceeds | Approximately RMB 3.60 billion |
| Approximate US dollar equivalent at the time | US$500 million |
| Net proceeds | Approximately RMB 3.285 billion |
The IPO represented more than a financing transaction.
MGI required sustained investment in manufacturing capacity, international distribution, service networks, research and development, and personnel.
Listing on the STAR Market provided a mechanism for raising capital independently of internal funding allocations within the BGI group.
However, becoming a publicly listed company did not mean complete independence from BGI's ownership and control.
5.3. Stage Three: Continued Control by the BGI Group
As of the end of September 2026, MGI's largest shareholder, Shenzhen BGI Technology Holding Group Co., Ltd. (深圳华大科技控股集团有限公司), held approximately 153 million shares, representing 36.73% of the company.
MGI's 2025 annual report identified Wang Jian as its ultimate controlling person (实际控制人). [5]
Thus, MGI operates as an independently listed company while remaining closely connected to the BGI corporate group through its ownership and governance structure.
5.4. A Major Corporate Restructuring in 2026
In March 2026, MGI incorporated two businesses from related companies within the broader group. [7]
| Acquired business | Core technology | Strategic significance |
|---|---|---|
| STOmics-related business | Spatial omics technologies, including Stereo-seq | Integration of high-resolution spatial transcriptomics into MGI's portfolio |
| CycloneSEQ-related business | Nanopore sequencing | Integration of long-read sequencing development and commercialization |
The share transfers were completed on March 10, 2026.
For accounting purposes, the transactions were treated as business combinations under common control, resulting in retrospective adjustments to comparative financial figures. [6]
This restructuring was particularly significant.
MGI's product portfolio had already included spatial omics and nanopore-related technologies.
However, integrating businesses that had previously been distributed across the BGI group created a more unified structure for technology development, product commercialization, and sales.
Consequently, it is increasingly difficult to characterize MGI's 2026 business portfolio as essentially the same DNBSEQ-centered business that existed in earlier years.
6. Leadership and People: The Individuals Behind MGI's Development
Three broad categories of expertise have shaped MGI's development: corporate leadership and capital allocation, scientific and technological innovation, and commercial execution.
6.1. Wang Jian: Corporate Leadership and Capital Strategy
Wang Jian (汪建) has been a central figure in BGI's development and serves as MGI's chairman and ultimate controlling person.
He has played a major role in developing an integrated business ecosystem spanning large-scale genomics research, medical applications, and instrument development.
Understanding his role is essential to understanding MGI's capital structure and continuing relationship with the broader BGI group.
6.2. Radoje (Rade) Drmanac: Scientific and Technological Foundations
Radoje (Rade) Drmanac is one of the co-founders of Complete Genomics and has been identified as Chief Scientific Officer of MGI.
He is an important figure in the development of DNA nanoball sequencing and high-density sequencing technologies.
His continued association with the business following the 2013 acquisition symbolizes the retention of scientific expertise within the MGI organization.
Drmanac's involvement also illustrates why MGI should not be understood simply as a company that purchased foreign patents and transferred manufacturing to China.
Its technology evolved through continued collaboration between sequencing researchers in the United States and engineering teams in China.
6.3. Mu Feng: Leadership Through Establishment, Expansion, and IPO
Mu Feng (牟峰) served as MGI's general manager, a role broadly equivalent to CEO, from April 2016 through April 2026.
He holds a doctorate in genetics and has extensive experience managing businesses within the BGI group.
He was a central executive throughout MGI's establishment, expansion of its instrument portfolio, IPO, and international commercialization.
6.4. Liu Jian: Leadership with Instrument Engineering and International Business Experience
Liu Jian (劉健) became MGI's general manager in April 2026.
He holds a master's degree in mechatronic engineering from Huazhong University of Science and Technology.
His professional background includes Mindray, Leica Microsystems, and instrument development operations within BGI.
He joined MGI and became an executive vice president in 2018, subsequently taking responsibility for the Americas business in 2023.
In April 2026, Mu Feng transitioned to vice chairman while Liu Jian assumed the general manager position.
The company described the transition as a change in business responsibilities.
This leadership change may be consistent with a broader shift in managerial priorities.
Mu Feng's background is closely associated with genomics research and business operations within BGI.
Liu Jian's experience places greater emphasis on mechatronic engineering, instrument commercialization, and international sales.
The transition therefore appears consistent with a stage in which commercial execution, product platforms, global expansion, and profitability become increasingly important.
However, publicly available information is insufficient to establish whether these strategic considerations were the actual reasons behind the personnel change.
6.5. The Structure of MGI's Research and Development Workforce
According to company disclosures for the end of 2022, MGI employed more than 2,800 people, approximately 36% of whom worked in research and development.
This workforce composition reflects a technology-intensive manufacturer that develops its own hardware, reagents, software, and manufacturing processes, rather than a distributor primarily reselling equipment from other companies.
However, such an organization also carries substantial fixed costs.
Research and development expenditures can be significant, and the time between scientific investment and commercial returns can be long.
7. Financial Evolution: Why Did Rapid Growth Give Way to Losses?
MGI's history reveals a clear distinction between technological achievement and financial performance.
7.1. Revenue Trends
MGI's reported revenue evolved as follows.
| Year | Revenue (RMB 100 million) |
|---|---|
| 2020 | 27.80 |
| 2021 | 39.29 |
| 2022 | 42.31 |
| 2023 | 29.11 |
| 2024 | 30.13 |
| 2025 | 27.80 |
| January–September 2026 | 21.50 |
The figures for 2020–2025 represent annual reported revenue.
The 2026 figure covers only the first nine months and is not directly comparable with full-year revenue.
It also incorporates figures affected by retrospective adjustments associated with business combinations under common control. [5][6]
Growth was substantial between 2020 and 2022, when revenue increased from approximately RMB 2.78 billion to RMB 4.23 billion.
However, annual revenue subsequently declined to approximately RMB 3 billion or less.
This change cannot be explained by a single factor.
First, demand for COVID-19-related testing and automation changed after the pandemic.
The exceptional demand for testing infrastructure during the pandemic did not necessarily continue at the same level.
Second, international market expansion requires time.
Selling a sequencer involves much more than delivering an instrument.
Customers require assay validation, confirmation of data quality, reliable reagent supply, and access to maintenance and technical support.
Third, investments in new products and technologies preceded their commercial returns.
Expansion into long-read sequencing, spatial omics, and automation broadened MGI's product portfolio but also required expenditures that could take years to generate sufficient revenue.
7.2. Net Profit and Operating Cash Flow
Revenue alone does not adequately describe MGI's financial trajectory.
The following net income figures represent profit attributable to shareholders of the parent company.
| Year | Revenue (RMB 100 million) | Net income (RMB 100 million) | Operating cash flow (RMB 100 million) |
|---|---|---|---|
| 2020 | 27.80 | +2.61 | +0.05 |
| 2021 | 39.29 | +4.84 | +10.73 |
| 2022 | 42.31 | +20.26 | +14.21 |
| 2023 | 29.11 | -6.07 | -8.70 |
| 2024 | 30.13 | -6.01 | -7.74 |
| 2025 | 27.80 | -2.22 | +2.19 |
| January–September 2026 | 21.50 | -1.87 | +4.50 |
The 2026 figures represent unaudited results for the first nine months.
Comparisons also require caution because 2022 included substantial non-recurring gains, while the 2026 financial statements reflect retrospective adjustments related to the corporate restructuring. [5][6]
MGI's reported net income of RMB 2.026 billion in 2022 appears exceptionally strong.
However, net income attributable to shareholders after excluding non-recurring gains and losses was approximately RMB 264 million.
It would therefore be misleading to treat the entire 2022 reported profit as evidence of sustainable operating profitability.
In 2023 and 2024, MGI recorded annual net losses of approximately RMB 600 million, accompanied by negative operating cash flow.
In 2025, losses narrowed and operating cash flow returned to positive territory.
Operating cash flow improved further during the first nine months of 2026.
These figures suggest that MGI experienced a deterioration in profitability and cash generation during 2023–2024, followed by signs of improvement in 2025–2026.
However, a sustained return to positive net income had not yet been demonstrated.
7.3. Financial Performance in 2026
According to MGI's third-quarter report published on October 24, 2026, the company's principal financial indicators for January–September 2026 were as follows. [6]
| Indicator | January–September 2026 |
|---|---|
| Revenue | RMB 2.150 billion |
| Year-on-year revenue growth | +11.98% |
| Net income attributable to parent shareholders | -RMB 187 million |
| Operating cash flow | +RMB 450 million |
| R&D investment as a percentage of revenue | 19.18% |
| R&D investment as a percentage of revenue in the comparable prior period, restated | 28.37% |
An important change is that improvements were visible not only in revenue growth but also in expense management and operating cash flow.
Nevertheless, a decline in the R&D-to-revenue ratio should not automatically be interpreted as greater efficiency.
A more detailed assessment would require examining research programs, commercialization milestones, staffing changes, and the capitalization of development costs.
It would also be necessary to determine whether lower spending affects the company's future innovation capabilities.
8. Major Challenges and How MGI Has Responded
One of the defining characteristics of MGI's history is that the company has faced challenges extending far beyond sequencing technology itself.
Intellectual property, international politics, supply chains, and capital efficiency have all influenced its development.
8.1. Challenge One: Illumina's Intellectual Property and Market Position
Beginning in 2019, MGI, Complete Genomics, and Illumina became involved in multiple patent disputes, particularly in the United States.
These disputes represented one of the major obstacles to MGI's international commercialization.
NGS instruments rely on complex combinations of patented technologies.
Even when two systems employ substantially different overall sequencing architectures, particular elements—such as nucleotide detection, molecular labeling, image processing, and library preparation—may still fall within the scope of patents held by other companies.
MGI and Complete Genomics possessed their own patents and asserted infringement claims against Illumina.
In May 2022, a jury in Delaware found that Illumina had infringed patents held by Complete Genomics and awarded approximately US$334 million in damages.
On July 14, 2022, the companies announced a comprehensive settlement. [4]
The major terms included:
- A net payment of US$325 million from Illumina to Complete Genomics.
- Resolution of related patent infringement litigation and antitrust claims.
- Licensing of certain two-color sequencing-related patents to Illumina.
- A framework permitting the sale of MGI CoolMPS products in the United States beginning in August 2022 and certain StandardMPS products beginning in January 2023.
- A three-year mutual covenant not to sue covering specified existing platforms.
Through this agreement, MGI used its intellectual property position as a negotiating asset and reduced barriers to entry into the US market.
However, this outcome should not be described as a complete legal victory for MGI over Illumina.
Both parties had asserted claims involving different patents, and the settlement resolved litigation risks through negotiated terms.
Moreover, the agreement did not eliminate all future patent infringement risks for new products or across every jurisdiction.
8.2. Challenge Two: Long-Read Sequencing and a New Patent Dispute
In 2026, MGI encountered a new intellectual property challenge in its long-read sequencing business.
MGI entered the nanopore sequencing market through CycloneSEQ.
However, Oxford Nanopore Technologies already held an extensive portfolio of patents in this field.
In September 2026, the Munich Local Division of the Unified Patent Court (UPC) issued a provisional injunction against MGI's German subsidiary, MGI Tech GmbH, following an application by Oxford Nanopore.
The injunction concerned CycloneSEQ-related systems and flow cells.
It affected activities such as sales, imports, and supply in certain European jurisdictions.
MGI disputed the decision and indicated its intention to appeal.
This development resembles the structural challenges encountered during its earlier disputes with Illumina.
Entering a new technology market can create patent risks even when a company has developed its own technology.
For MGI to establish a sustainable position in long-read sequencing, it must address not only sequencing performance and cost but also freedom to operate (FTO) in important markets.
As of November 3, 2026, this issue cannot be regarded as resolved.
8.3. Challenge Three: Geopolitics, Human Rights Concerns, and International Regulation
Any assessment of MGI's current position must also consider its geopolitical and regulatory environment.
Companies within the BGI group have attracted scrutiny in the United States concerning genomic data handling, human rights, and national security.
Importantly, BGI Genomics, BGI Tech Solutions (Hongkong), and MGI Tech are separate legal entities.
Their status under different US regulatory lists should not be conflated.
A particularly important recent development occurred on October 29, 2026.
The US Federal Register published additions to the Uyghur Forced Labor Prevention Act (UFLPA) Entity List that included MGI Tech, BGI Genomics, and BGI Group. [8]
The US government stated that it had reasonable cause to believe MGI had contributed to genetic testing capabilities associated with the Xinjiang Uyghur Autonomous Region government, and that such testing was connected to government programs involving forced labor.
This represents a determination by the US government, rather than a final judicial finding establishing every underlying allegation.
In a statement dated October 28, 2026, MGI denied the allegations and said it was considering administrative challenges and legal remedies.
The company also stated that its US business represented a limited share of its operations and that business activities in other regions were continuing normally.
The matter remained unresolved as of November 3, 2026.
Although the UFLPA primarily addresses restrictions on imports into the United States, its potential commercial effects may extend beyond customs procedures.
Universities, hospitals, and companies may consider supply continuity, reputational risk, research funding requirements, and collaboration agreements when selecting sequencing platforms.
Geopolitical risk is therefore not simply an external political concern for MGI.
It can also directly influence international sales strategy and procurement decisions.
8.4. Challenge Four: Expanding Instrument Sales While Building Recurring Revenue
The economics of a sequencing instrument business cannot be understood from instrument sales alone.
Several factors are especially important:
- The cumulative installed base of instruments.
- Utilization rates per instrument.
- Recurring purchases of proprietary reagents and flow cells.
- Gross margins on instruments and consumables.
- Revenue from maintenance contracts and application support.
- The likelihood of customers migrating to competing sequencing platforms.
Increasing the number of installed instruments is important, but it does not automatically result in a profitable business.
For example, a manufacturer may sell an ultra-high-throughput sequencer at a competitive price.
If the customer does not have enough samples to operate the system at high utilization, subsequent reagent sales may fall below expectations.
Similarly, new instrument generations may reduce demand for consumables associated with older products.
Expanding the instrument portfolio does not therefore guarantee higher profits.
As of April 2026, MGI reported a cumulative installed base exceeding 5,300 instruments and more than 3,560 users.
However, these are cumulative figures disclosed by the manufacturer.
They should not be confused with the number of actively operating instruments, annual consumables spending, or utilization rates across different instrument generations.
For this reason, recurring consumables revenue and operating cash generation may be more informative indicators of MGI's long-term commercial performance than instrument shipments alone.
9. How Has MGI's Identity Changed Over Time?
MGI's evolution can be understood as a gradual transformation in the nature of its business.
| Period | Corporate identity | Core source of competitiveness |
|---|---|---|
| Before 2013 | Technology requirements arising from BGI's large-scale sequencing service operations | Experience operating sequencing at scale |
| 2013–2016 | Technology acquisition and sequencing instrument development initiative | Complete Genomics technology and intellectual property |
| 2016–2019 | NGS instrument manufacturer | Commercialization of DNBSEQ |
| 2020–2022 | Integrated provider of NGS and laboratory automation | Integration of instruments, reagents, and automation |
| 2023–2025 | International NGS platform manufacturer | Throughput, cost competitiveness, and product diversity |
| 2026 onward | Company seeking to become a multi-omics laboratory infrastructure provider | Integration of short-read, long-read, spatial omics, and AI technologies |
MGI's 2026 strategy, summarized as "SEQ ALL + GLI + Omics," reflects this shift.
However, progress differs considerably across these technology areas.
DNBSEQ is already an established commercial sequencing platform.
In contrast, the long-read business centered on CycloneSEQ faces intellectual property challenges and must establish a durable market position.
Spatial omics and AI-enabled laboratory platforms also need to be evaluated in terms of their commercial revenue, rather than scientific development or product announcements alone.
9.1. Where Does MGI's Technological Competitiveness Come From?
MGI's technological strengths cannot be explained solely by the performance of any one instrument.
Its competitive capabilities reflect the combination of proprietary technology originating from Complete Genomics, product engineering, reagent chemistry, manufacturing, and workflow automation.
However, developing a technically capable sequencer and building a consistently profitable instrument company are not the same achievement.
Business performance also depends on recurring consumables revenue, customer utilization, migration between instrument generations, maintenance and support infrastructure, and freedom to operate under relevant intellectual property rights.
As MGI expands further into long-read sequencing and spatial omics, it must maintain and develop multiple technological architectures simultaneously.
This may strengthen its product portfolio, but it can also increase research and development expenditures and the difficulty of commercialization.
10. Overall Assessment: Achievements and Remaining Challenges
Looking back over approximately a decade of MGI's development, the company has achieved substantial technological and commercial milestones.
At the same time, important challenges remain regarding profitability and the sustainability of its international operations.
10.1. What Has MGI Accomplished?
First, BGI acquired a technological foundation that reduced its dependence on external sequencing instrument manufacturers.
Through the acquisition of Complete Genomics in 2013, BGI transformed itself from a group heavily dependent on external sequencing technology into one that possessed its own instrument development capabilities.
Second, MGI successfully transformed that technological foundation into commercial products.
It established instrument families ranging from low-throughput to ultra-high-throughput sequencing and expanded their applications across research, clinical, and public health settings.
The DNBSEQ-T20×2 is particularly representative of the company's ambition to position sequencing as infrastructure for industrial-scale genomic analysis.
Third, MGI used its intellectual property portfolio to support international market entry.
Patents developed through Complete Genomics provided negotiating leverage in its disputes with Illumina.
The 2022 settlement helped establish a route into the US market.
Fourth, MGI established a publicly listed financing platform.
Its 2022 IPO provided access to public capital markets.
The integration of long-read sequencing and spatial omics businesses in 2026 further broadened its technological portfolio.
10.2. What Challenges Remain Unresolved?
Several major business issues remain.
Profitability
Although operating cash flow improved in 2025–2026, the company continued to report net losses.
Intellectual Property Risk
MGI resolved important disputes with Illumina, but its expansion into nanopore sequencing has created new litigation with Oxford Nanopore.
Geopolitical Risk
The October 2026 addition of MGI to the UFLPA Entity List may affect its international commercial operations.
Commercialization of New Businesses
Spatial omics and AI laboratory systems need to progress from research results and product announcements into sustainable revenue-generating businesses.
Profitability of the Installed Instrument Base
MGI must translate cumulative instrument installations into consistent utilization, reagent purchases, and maintenance revenue.
10.3. Five Indicators Worth Monitoring
For anyone interested in assessing MGI's future competitiveness and financial sustainability, five indicators are especially useful.
| Indicator | Key question |
|---|---|
| 1. Growth in consumables and reagent revenue | Are additional instrument installations generating recurring revenue? |
| 2. International revenue and geographic composition | How successfully is MGI developing customers outside China and beyond the BGI ecosystem? |
| 3. Gross margins and operating cash flow | Is competition on instrument pricing putting pressure on profitability? |
| 4. CycloneSEQ freedom to operate and commercialization | Can MGI establish a sustainable long-read sequencing business? |
| 5. Revenue contribution from STOmics and GLI | Is the transition toward a comprehensive multi-omics company producing meaningful commercial results? |
In particular, MGI's long-term prospects should not be judged solely by the number of new instruments it releases.
A more important question is whether customers continue to operate its platforms, purchase reagents and flow cells, and migrate to subsequent generations of instruments.
These recurring commercial relationships will strongly influence whether MGI can become a sustainably profitable global instrument manufacturer.
10.4. Conclusion
MGI's history can be summarized in one sentence:
It is the story of how BGI, originally a massive user of sequencing technology, acquired advanced technology in the United States, established its own instrument manufacturer, and expanded through international competition toward becoming a comprehensive life sciences equipment company.
Its development has been shaped not only by advances in sequencing technology but also by intellectual property acquisition and litigation, corporate restructuring, capital investment, organizational management, and international regulation.
As of 2026, MGI appears to have entered a new phase.
The central challenge is no longer simply expanding its technological portfolio.
Increasingly, the company must demonstrate its ability to convert those technologies into stable and sustainable profits.
Two areas deserve particularly close investigation.
The first is how Complete Genomics' original technologies evolved through BGISEQ into modern DNBSEQ platforms.
The second is where MGI may possess durable technological and economic advantages relative to Illumina and Oxford Nanopore.
A detailed examination of these questions would provide a stronger basis for understanding not only MGI's historical development but also its future competitive position.
References
[1] BGI-Shenzhen, “BGI-Shenzhen Completes Acquisition of Complete Genomics,” 2013. Document filed with the US Securities and Exchange Commission.
https://www.sec.gov/Archives/edgar/data/1361103/000119312513115266/d505250dex992.htm
[2] MGI Tech, “MGI: Who We Are,” MGI Tech corporate overview.
https://global-mgitech.com/mgi-who-we-are/
[3] “Short-Read Sequencing Technologies,” Clinical Chemistry, 2025. DOI: 10.1093/clinchem/hvae173.
https://doi.org/10.1093/clinchem/hvae173
[4] MGI Tech, “MGI Statement Regarding Litigation in the United States with Illumina,” MGI Tech corporate statement.
https://global-mgitech.com/mgi-statement-regarding-litigation-in-the-united-states-with-illumina/
[5] Shenzhen MGI Tech Co., Ltd. (深圳华大智造科技股份有限公司), “2025 Annual Report” (2025年年度报告), Shanghai Stock Exchange disclosure, 2026.
https://vip.stock.finance.sina.com.cn/corp/view/vCB_AllBulletinDetail.php?id=12197458&stockid=688114
[6] Shenzhen MGI Tech Co., Ltd. (深圳华大智造科技股份有限公司), “Third Quarter Report 2026” (2026年第三季度报告), Shanghai Stock Exchange disclosure, October 2026.
https://money.finance.sina.com.cn/corp/view/vCB_AllBulletinDetail.php?id=12657712&stockid=688114
[7] MGI Tech, “MGI Tech Announces Acquisition of STOmics and CycloneSEQ to Deliver Integrated Long-Read, Short-Read, and Spatial Omics Solutions,” 2026.
https://global-mgitech.com/mgi-tech-announces-acquisition-of-stomics-and-cycloneseq-to-deliver-integrated-long-read-short-read-and-spatial-omics-solutions/
[8] US Department of Homeland Security, “Additions to the Uyghur Forced Labor Prevention Act Entity List,” Federal Register, October 29, 2026.
https://www.govinfo.gov/content/pkg/FR-2026-10-29/html/2026-22094.htm