Bottom line: SMIC’s new plan for a $10 billion cutting-edge chip plant shows it could be well positioned to find a place on the global stage by tapping strong government support after an overhaul of its own operations.
SMIC announces $10 bln chip plant
I rarely write these days about SMIC (HKEx: 981; NYSE: SMI), since the company once billed as China’s best hope to challenge global chip giants like Intel (Nasdaq: INTC) and TSMC (Taipei: 2330) has been a major disappointment since its Hong Kong listing a decade ago. But the company’s newly announced plan for a $10 billion cutting-edge plant was enough to catch my attention, and shows SMIC could become a company to watch due to Beijing’s sudden determination to build up a globally competitive chip sector at any cost. Read Full Post…
Bottom line: A Chinese buyer’s plan to purchase US chip maker Analogix for more than $500 million is unlikely to meet with political resistance, and could mark a new template for similar cross-border chip M&A by China.
Chinese group bids for US-based Analogix
After failing at several high-profile attempts to buy US microchip technology, China is trying once again with a newly announced plan to acquire venture-backed chipmaker Analogix Semiconductor for more than $500 million. Unlike previous failed efforts that targeted more mature companies, the acquisition target in this case is much younger, since Analogix was only founded in 2002.
This new deal looks strikingly similar to another one earlier this year that saw the Shanghai-based National Silicon Industry Group purchase a similarly young Finnish chipmaker called Okmetic in a deal that valued the company at nearly $200 million. (previous post) That deal and this latest one don’t appear to be related, though one can never be completely sure due to the vague descriptions of the buyers in both cases. Read Full Post…
Bottom line: Western Digital’s new China joint venture is unlikely to raise national security objections from Washington, but could add to a looming global semiconductor glut due to an aggressive build-up of the sector by Beijing.
Western Digital China JV moves ahead
Just a half year after Washington killed its plans for a major investment from China, memory storage giant Western Digital (Nasdaq: WDC) is thumbing its nose at US security regulators by moving ahead with joint venture that was part of the earlier tie-up plan. I’m probably overstating Washington’s objections in this instance, since US officials never formally vetoed a deal that would have seen Western Digital sell 15 percent of itself to China’s Unisplendour for $3.8 billion.
Instead, Washington simply said the deal would require a review for national security risk, refuting Western Digital’s earlier view that the sale shouldn’t require such approval. The threat of a review was enough for both sides to decide to scrap the sale, though their latest announcement shows they are continuing ahead with a joint venture that was part of their broader tie-up plan. Read Full Post…
Bottom line: Seagate’s new partnership with Sugon is the latest tie-up designed to give a major western hardware maker continued access to China’s IT services market, even as such partnerships sharply raise the risk of IP theft.
Seagate in new China tie-up
The steady stream of US tech firms bowing to Beijing’s tough new rules for doing business in China has just gained a new member, with word that data storage specialist Seagate (Nasdaq: STX) has just formed a new local joint venture. This particular tie-up comes just a half year after Seagate’s new partner, a company called Sugon (Shanghai: 603019), formed another similar cloud computing partnership with VMWare (Nasdaq: VMW), a unit of data storage giant EMC (NYSE: EMC).
The new Seagate alliance and slightly older VMWare venture come as most major US high-tech hardware makers, including the likes of IBM (NYSE: IBM), Hewlett Packard Enterprise (NYSE: HPE) and Cisco (Nasdaq: CSCO), have all formed similar tie-ups in a new love affair with Beijing. Of course I’m being slightly facetious in calling it a love affair, since these companies really didn’t have any choice in the matter. Read Full Post…
Bottom line: China’s latest plan to buy Finnish chip maker Okmetic could get vetoed on national security concerns, reflecting foreign government concerns about selling technology companies to government-backed entities.
Finland’s Okmetic gets buyout bid from China
China’s ambitions of building a world-class high-tech microchip industry were in the headlines again last week, when the small Finnish chip maker Okmetic (Helsinki: OKM1V) revealed it had received a takeover bid from a government-backed company based in Shanghai. Beijing’s ambitions are understandable, since China currently buys over 60 percent of the world’s microchips to feed its vast manufacturing complex that makes everything from smartphones to computers and home appliances.
But recent resistance in the US and Taiwan has also highlighted reluctance by overseas governments to seeing their companies purchased by the big state-run vehicles that Beijing has recently set up to achieve its aims. Historically speaking, China has also achieved mixed results when the government backs big microchip projects, which often fall victim to government agendas that limit their ability to quickly respond to the fast-changing market. Read Full Post…
Bottom line: Huawei’s new move into notebook PCs could seriously challenge the existing establishment, and it could become a top 5 brand by the end of next year.
Huawei moves into notebook PCs
Telecoms giant Huawei is making a surprise move into the PC market, with word that it will launch a new line of notebook models next month using chips supplied by Intel (Nasdaq: INTC). The move would put Huawei into direct competition with leading PC maker Lenovo (HKEx: 992), as it aggressively expands beyond its older networking equipment business and diversifies into consumer electronics.
Huawei’s move into notebooks isn’t a huge surprise, since such products are increasingly similar to the new generation of smartphones where Huawei has found recent success. Huawei already sells tablet PCs, which perform many of the functions as notebooks as well. But the move does represent an entire new product area for Huawei, and is almost certain to put the company on collision course with Lenovo in their home China market. Read Full Post…
The following press releases and media reports about Chinese companies were carried on January 16-18. To view a full article or story, click on the link next to the headline.
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China’s Haier to Buy GE’s (NYSE: GE) Appliance Unit for $5.4 Bln (English article)
Huawei Says to Launch Notebook PCs in February with Intel (Nasdaq: INTC) (Chinese article)
Regulator Orders Removal of False Claims Posts on Baidu (Nasdaq: BIDU) Tieba Service (Chinese article)
Xiaomi Misses Smartphone Sales Target by 10 Pct on China Slowdown (English article)
JD.com (Nasdaq: JD) Finance Arm Raises 6.65 Bln Yuan, Valued at 46.7 Bln Yuan
Bottom line: Next year’s likely election of a Taiwan president from its current opposition party could delay many of Tsinghua Unigroup’s pending Taiwan acquisitions, crimping its plans to build a Chinese chip giant using Taiwanese technology.
Unigroup buys into 2 more Taiwan chip firms
Barely a week seems to pass without news of a major new acquisition by Tsinghua Unigroup, the Beijing-backed company that suddenly seems intent on building a global chip giant able to challenge worldwide leaders like Intel (NYSE: INTC), TSMC (Taipei: 2330) and Samsung (Seoul: 005930). The company is once again in the headlines as we head into year-end, this time in new deals to buy stakes in 2 Taiwanese chip firms for a combined $2.1 billion.
These latest deals follow another major purchase in Taiwan last month, making it increasingly clear that Unigroup hopes to combine its own financial resources and government connections with Taiwan’s high-tech expertise to realize its chip-making dreams. That plan looks good in principle, since China and Taiwan are highly complementary and also share many cultural elements. But the plan could run into big problems next year, as Taiwan’s political landscape looks set for major change that could see the current China-friendly regime replaced with a more conservative government. Read Full Post…
Bottom line: China Resources’ unsolicited bid for Fairchild Semiconductor is certain to fail, but reflects Beijing’s desire to broaden its field of domestic companies making bids for global microchip companies.
China Resources enters chip-buying race
Beijing’s recent bid to build up its high-tech microchip sector is in the headlines again, with word that state-run conglomerate China Resources has made an 11th-hour bid for mid-sized US chip company Fairchild Semiconductor (Nasdaq FCS). This particular bid, which would value Fairchild at nearly $2.5 billion, was quite a surprise, since Fairchild had agreed just last month to be acquired by US rival ON Semiconductor (Nasdaq: ON).
There are 2 major elements to this chip story that has seen China become a sudden major bidder for global assets. The biggest picture is a story of consolidation in the global sector, which is long overdue and comes as maturing technology and has created an intensely competitive field of mid-sized players, many of those losing money. The second element is Beijing’s own recent decision to join the field of global buyers, as it tries to build up a homegrown chip giant to compete with big global players like Taiwan’s TSMC (Taipei: 2330) and South Korea’s Samsung (Seoul: 005930). Read Full Post…
Bottom line: TSMC’s plan for a $3 billion Nanjing chip plant marks the latest in a nascent but growing string of China-Taiwan tie-ups in the chip space, which could gain momentum under Beijing’s recent aggressive program to develop the industry.
TSMC to build $3 bln chip plant in Nanjing
After years of disappointment for failing to fulfill its potential, China high-tech chip sector has suddenly come to life over the last year with a flurry of deals that hint Beijing is taking the lead to promote the sector. The latest of those is one of the biggest and most significant yet in terms of technology, with word that Taiwan’s TSMC (Taipei: 2330; NYSE: TSM), the world’s leading contract chip maker, will build a $3 billion state-of-the-art 12-inch wafer plant in the city of Nanjing.
The move is particularly significant because TSMC is the clear global leader in high-tech microchip production, with a client list that includes most of the world’s major companies like Qualcomm (Nasdaq: QCOM) and Apple (Nasdaq: AAPL). The deal also marks the latest in a nascent series of tie-ups between China and Taiwan in the chip-making space, a potent combination that could someday counter current powerhouses in South Korea and Japan. Read Full Post…
Bottom line: Tsinghua Unigroup is likely to soon announce big new tie-ups with SanDisk and a major second-tier Asian chip maker, in its bid to become a major memory chip maker that can challenge Samsung and Toshiba.
Unigroup eyes 2 new chip tie-ups
After becoming a regular fixture in the headlines over the last year, Tsinghua Unigroup is finally giving the world a more detailed picture of its plans to become a leading global chip maker in one of the first in-depth interviews with its talkative chairman. In that interview Zhao Weiguo is disclosing for the first time that he has a massive war chest of 300 billion yuan ($47 billion) to spend on building his empire.
What he doesn’t say is where exactly all that money is coming from, since it’s quite a large sum for a company that was an unknown name in most semiconductor circles until it embarked on its buying spree over the last 2 years. The answer is almost certainly that Beijing and big state-run institutions are supplying all the funds, as China looks to succeed in an areas where many smaller earlier initiatives have failed in the high-tech chip sector. Read Full Post…
