Un­i­group in re­ported $23b bid for Mi­cron

China Daily (Canada) - - FRONT PAGE - By JACK FREIFELDER in New York and GAO YUAN in Bei­jing

Ts­inghua Un­i­group Ltd, a Chi­nese state-backed tech­nol­ogy con­glom­er­ate, is look­ing to buy US chip­maker Mi­cron Tech­nol­ogy Inc for $23 bil­lion.

If ap­proved, it would be the largest Chi­nese takeover of a US com­pany to date. But many an­a­lysts be­lieve the plan would face steep reg­u­la­tory hur­dles on both sides.

Ts­inghua Un­i­group is pre­pared to bid $21 per share for Mi­cron, which closed up $2, to $19.61 on Tues­day. The of­fer could come as early as Wed­nes­day, a per­son close to Ts­inghua told Reuters.

Mi­cron spokesman Dan Fran­cisco e-mailed China Daily that the com­pany “does not com­ment on ru­mor or spec­u­la­tion”. Un­i­group rep­re­sen­ta­tives de­clined to com­ment.

The Wall Street Jour­nal first re­ported the story on Tues­day, cit­ing sources.

Gene Cao, a se­nior an­a­lyst at con­sul­tancy For­rester Re­search Inc, said Un­i­group would greatly ben­e­fit from the takeover.

“Un­i­group is plan­ning the ac­qui­si­tion be­cause Mi­cron will en­hance its prod­uct lines of em­bed­ded chipsets and re­lated hard­ware, as well as flash stor­age and mem­ory com­put­ing,” Cao said.

Mi­cron, based in Boise, Idaho, also could boost Un­i­group’s smart-man­u­fac­tur­ing ca­pa­bil­ity, he said, so that the Chi­nese com­pany will be bet­ter po­si­tioned in the nextgen­er­a­tion chip man­u­fac­tur­ing and In­ter­net of Things seg­ments.

Vin­cent Gu, a Shang­haibased an­a­lyst at iSup­ply, told Reuters that the chances of the US gov­ern­ment ap­prov­ing the deal be­tween Mi­cron and Ts­inghua Un­i­group would be “next to zero”, given the po­lit­i­cal hur­dles.

“China should stay firmly grounded and per­se­vere with re­search­ing the tech­nol­ogy it­self,” he said.

Gu Wen­jun, chief an­a­lyst at iC­wise, a Shang­hai-based con­sult­ing com­pany, told Bloomberg News: “There is only a small pos­si­bil­ity US reg­u­la­tors will ap­prove this deal be­cause it has a very strict re­view over of­fers from for­eign cap­i­tal, es­pe­cially China.” But “this is the right move for Ts­inghua be­cause Mi­cron has mem­ory chip tech­nol­ogy, which is very hard to de­velop.”

Ts­inghua Un­i­group was founded in 1988 at China’s Ts­inghua Univer­sity, which is the alma mater of Chi­nese Pres­i­dent Xi Jin­ping and other se­nior of­fi­cials.

The com­pany be­came China’s largest chip-de­sign firm af­ter it ac­quired two of the coun­try’s largest mo­bile-chip mak­ers, Spread­trum Com­mu­ni­ca­tions and RDA Mi­cro­elec­tron­ics, in 2013.

Mi­cron, which was founded in 1978, has been a key player in the semi­con­duc­tor in­dus­try for more than three decades.

The com­pany makes sil­i­con-to-semi­con­duc­tor prod­ucts, in­clud­ing both dy­namic ran­dom ac­cess mem­ory (DRAM) chips and NAND mem­ory chips that al­low stor­age of mu­sic, pic­tures and other data on cam­eras, smart­phones and other mo­biles de­vices. Mi­cron also spe­cial­izes in other semi­con­duc­tor sys­tems.

As the only US- based DRAM man­u­fac­turer, any for­eign takeover of Mi­cron likely would have to pass a re­view by the Com­mit­tee on For­eign In­vest­ment in the United States.

If com­pleted, the takeover will be the big­gest in Chi­nese history, top­ping oil gi­ant CNOOC Ltd’s $15.1 bil­lion takeover of Cana­dian oil and gas pro­ducer Nexen Inc in early 2013.

The deal also would fur­ther Bei­jing’s goal of mak­ing the coun­try more self-suf­fi­cient in tech­nol­ogy. Con­tact the writ­ers at jack­freifelder@ chi­nadai­lyusa.com and gaoyuan@chi­nadaily.com.cn

PRO­VIDED TO CHINA DAILY

The stand of Unis­plen­dour Corp Ltd, a listed com­pany un­der Ts­inghua Un­i­group Ltd, at an in­ter­na­tional tech­nol­ogy expo in Bei­jing. Un­i­group is plan­ning to buy US chip­maker Mi­cron Tech­nol­ogy Inc to lift its top-tier global rank­ing.

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