Chinese firm lines up record bid for US chip maker
Published 15/07/2015 | 02:30
A firm linked to a Chinese university is preparing that country's biggest ever US corporate takeover.
Tsinghua Unigroup is lining up a $23bn (€20.8bn) bid for memory chip maker Micron Technology, people familiar with the matter said.
The technology conglomerate is prepared to bid $21 per share for Micron, a 19.3pc premium to the stock's close on Monday. The offer could come as early as today, a person close to Tsinghua told Reuters, although a Micron spokesman said it had not received an offer.
A successful bid would consolidate Tsinghua Unigroup's position as a champion for China's technology development.
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 foreign cyberspying.
But any foreign takeover of Idaho-based Micron - the last major US-based manufacturer of DRAM chips used in personal computers - would likely have to pass a review by the Committee on Foreign Investment in the United States.
Vincent Gu, a Shanghai-based analyst at iSupply, said the chances of the US government approving the deal would be "next to zero" given the political hurdles.
"It's difficult to purchase the critical technology. China should stay firmly grounded and persevere with researching the technology itself," Gu said.
Micron makes both dynamic random access memory (DRAM) chips and NAND memory chips for storing music, pictures and other data on smartphones, cameras and other mobile devices.
Acquiring Micron's cutting-edge memory manufacturing technology would be a major advance for China's modest but improving chip industry headed by Tsinghua Unigroup.
Tsinghua Unigroup transformed into a serious semiconductor player after it bought Chinese chipmakers RDA Microelectronics and Spreadtrum last year.
It also received a $1.5bn investment from Intel Corp in October, the two sides pledged to co-operate on research and further Chinese technology.
None of the world's top memory chip manufacturers are based in China.
Micron has manufacturing plants and a sales office in Taiwan, and indirectly holds a 20pc stake in Inotera Memories, a joint venture with Nanya Technology Corp. 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 $2bn and deals in sensitive industries.