Tag: Tsinghua

Chip company mergers and acquisitions reach $80 billion

intel_ireland_semiconductor_chip_fab_300mm_waferInterest in writing cheques for chipmakers through mergers and acquisitions (M&As) is expected to pick up.

Chipmakers have already announced over $80 billion worth of M&As in 2015.

Chipmakers are acquiring peers to expand capacity and capabilities ahead of an explosion in demand for all kinds of semiconductors necessitated by the Internet of Things.

Hidetoshi Shibata, chief financial officer of Japan’s Renesas, said that the days of chip companies growing through their own development are over and the only way to get bigger is by buying a rival.

The biggest buyers are the Chinese whose aggressive cheque book is pushing the value of merger targets beyond rivals’ reach. The leader is Tsinghua Unigroup which has spent $10 billion on M&As over the past two years and plans for almost $50 billion more over the next five.

Many Chinese deals are by privately held parties, such as Tsinghua, which this month earmarked almost $13 billion for a memory chip factory. In April, a group of Chinese investors agreed to buy US smartphone camera chip maker OmniVision Technologies for about $1.9 billion in cash.

More consolidation among companies making chips for memory and power management is expected.

Analysts think most of the Chinese buyouts are part of the plans of an emerging superpower to become self-sufficient, by controlling all aspects of a business and developing products to rival established players.

ON Semi buys Fairchild Semi

Picture courtesy of Wikimedia CommonsON Semiconductor has paid $2.4 billion to buy venerable Fairchild Semiconductor.

The move reflects the considerable consolidation in the semiconductor market over the last few years.

Fairchild is one of the earliest semiconductor companies, and its line of business is more or less completely different from ON. CEO Keith Jackson said the merger will deliver a company generating revenue of around $5 billion a year. He said the overlap will amount to less than $100 million.

This year has seen Avago buy Broadcom, and Intel buy Altera. The Chinese Tsinghua company, backed by the government, has made several attempts to buy its way into the global semiconductor industry, but has been hampered by rules imposed by the US and Chinese governments.

China to pour $47 billion into chip industry

Picture courtesy of Wikimedia CommonsTsinghua Unigroup, a conglomerate backed by the Chinese government, is to plunge $47 billion into the semiconductor business in the next five years.

That’s according to Reuters, which interviewed Tsinghua chairman Zhao Weiguo, who said China wants to become the third biggest semiconductor manufacturer in the world.

Intel, Samsung and Qualcomm hold the first three positions in semiconductor companies worldwide, but that could change because of the amount of money Tsinghua will throw into the chip pot.

Tsinghua has already said it has eyes on buying Mediatek and wanted to buy US memory manufacturer Micron. But moves like these are currently blocked by the Taiwanese and US governments respectively, which want to protect local manufacturers. Micron ruled out being bought  by Tsinghua.

But Tsinghua already has shares in US company Western Digital and Taiwan’s Powertech.

Western Digital buys SanDisk for $19 billion

Sandisk extreme SSDsHard disk drive maker Western Digital has agreed to buy SanDisk in a $19 billion deal which will see it in a strong position to make Flash drives for the known world.

The deal is pretty complex, which makes it less attractive to shareholders who think it will make them a quick buck.

Western Digital said the value of the transaction hinges on the closing of an investment in the company by Unisplendour which is a unit of Chinese government’s state-backed Tsinghua Holdings.

Unisplendour said it would buy 15 percent of Western Digital for $3.78 billion, a deal that is likely to face regulatory scrutiny amid national security concerns.

Western Digital Chief Executive Steve Milligan said in an interview that the SanDisk acquisition will ultimately dilute Unisplendor’s stake and that he was confident it would be approved by regulators.

“There’s always a risk and you’re not done until you’re done, but we were careful and consulted with US government experts,” he said.

Research firm Gartner said in October that worldwide semiconductor sales are expected to fall for the first time in three years in 2015, due partly to increasingly saturated market for smartphones.

Western Digital needs access to SanDisk’s NAND technology to better compete in the market for SSDs used in cloud computing, data centres, smartphones and laptops.

Western Digital said it had the support of SanDisk partner Toshiba which had some rights that could block a deal.

SanDisk has an intellectual property sharing joint venture with the Japanese company and uses its foundries to make chips.

Toshiba spokeswoman Midori Hara said in an email that the deal would not have a negative impact on that joint venture.

 

Micron and Western Digital want SanDisk

Sandisk extreme SSDsChipmaker Micron and hard disk drive maker Western Digital are in talks with memory chip maker SanDisk about a possible acquisition.

SanDisk is valued at about $12.6 billion and has hired a bank to help with the process. No decision has been made and the talks may not result in a transaction, but things appear promising.

Shares of SanDisk rose 12 percent to $69.20 in extended trading on Tuesday. Micron was up 3 percent and Western Digital under one percent.

Micron and Western Digital are an odd couple of buyers. Micron already has a significant flash memory operation.

Western Digital mainly makes traditional hard drives. SanDisk’s flash-memory chips are used in solid-state drives, which are faster and more reliable than traditional hard drives.

In fact, many expected a Chinese conglomerate to be a more interested party to potentially acquire SanDisk. China’s government wants to step up its chip industry and has been tipped to buy SanDisk before.

Tsinghua Unigroup offered $23 billion for Micron, but the plan was been clouded by US security concerns. In the end Tsinghua invested $3.78 billion in Western Digital, worth a 15 percent stake.

Analysts have said the cash infusion could allow Western Digital to take bigger steps in flash and solid-state storage, its key interest areas.

SanDisk’s price is low. It has dropped about 37 percent year-to-date as the company dealt with falling prices in the flash memory market.

A delay in sales of certain embedded parts used in solid-state drives has also weighed on the company’s results.

Memory maker Micron does well

BN-JJ273_0713MI_P_20150713201819The cocaine nose jobs of Wall Street have emerged screaming from their marble-tiled toilets in shock after it emerged that the memory chip maker Micron had done better than expected.

Micron Technology reported a lower than expected fall in quarterly revenue and that industry breathed a shy of relief. The company’s shares rose as much 8.3 percent.

The company predicted a revenue of $3.35 billion-$3.6 billion for the current quarter, well below analysts’ average expectation of $3.73 billion.

But the DRAM and NAND flash maker reported a 14.8 percent fall in revenue to $3.60 billion in the fourth quarter, compared with a year earlier. Analysts thought that would be $3.55 billion.

Micron said it expects the demand environment to stabilise and improve in 2016.

Micron said net income attributable to the company fell 59 percent to $471 million. Excluding items, the company earned 37 cents per share, trumping analysts’ estimates of 32 cents per share.

Micron is currently being chased by China’s state-backed Tsinghua Unigroup. This little rally might make the company a little more expensive.

Tsinghua, whose unit bought a 15 percent stake in Western Digital Corp for $3.8 billion on Wednesday, has offered $23 billion for Micron. It has not heard back yet because the US is unlikely to want to let one of its companies be owned by a company it thinks will spy on it. Oddly enough, the only country to force its hardware companies to spy on rival governments has been the US.

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.