Chinese make bid for Micron

ChinaChina’s state-backed Tsinghua is trying to buy US memory chip maker Micron Technology in a a $23 billion bid.

The deal will be the biggest Chinese takeover of a US  company and is guaranteed to upset the US government which  is worried about technology ending up in Chinese hands.

The bid is expected to be made by tomorrow, and so far Micron knows little about it.

If it does manage to get its paws on Micron, Tsinghua would be a key champion for China’s technological development. It has already struck deals and research partnerships with international firms in the semiconductor industry.

The company is controlled by Tsinghua University in Beijing, which counts President Xi Jinping among its alumni, and is backed by China’s central government.

China has attached strategic importance to the development of domestic semiconductor, server and networking equipment industries amid fears of cyber-spying by the Americans.

Micron is the last major US based manufacturer of DRAM chips used in personal computers. This means that it will have to pass a review by the Committee on Foreign Investment in the United States, which reviews such deals for national security implications. There aren’t any really, but the US is paranoid about these things.

Micron makes both dynamic random access memory chips, or DRAM, and NAND memory chips for storing music, pictures and other data on smartphones, cameras and other mobile devices. It has a partnership with chip behemoth Intel.

None of the world’s top memory chip manufacturers are based in China, although South Korea’s Hynix has a plant in Wuxi and Samsung, the global market leader, also from South Korea, last year began full-scale production at a new NAND chip factory in Xi’an.

Micron has manufacturing plants and a sales office in Taiwan, and indirectly holds a 20 percent stake in Inotera Memories, a joint venture with Nanya Technology. If Micron became a Chinese-owned company, Taiwanese rules would require it to re-submit its investment application for review.

A Micron deal could also face scrutiny from China’s National Development and Reform Commission, which must approve outbound investments worth more than $2 billion or those in sensitive industries. However this is likely to be rubber stamped.