Bottom line: Samsung’s new $7 billion investment in a chip expansion in Xi’an should help to earn big government goodwill, which could help position its smartphone division for a rebound in China.
Samsung expands chip chip plant
A major new China investment by chip maker Samsung(Seoul: 005930) is spotlighting just how important the market has become to the company, and South Korean companies in general, and how they are trying to play into Beijing’s agendas to maintain their place at the table. That’s become all the more important lately, as a disagreement between Beijing and Seoul has been costing South Korean companies business in China, as often happens when such political disputes spill out into the business sector.
This particular investment, totaling $7 billion, was obviously in the planning stages long before that dispute broke out earlier this year, involving Seoul’s decision to install a sophisticated anti-missile defense system supplied by the US to counter the North Korean threat. But Samsung’s decision to make its announcement now looks shrewd, as it should win it some goodwill from Beijing at a time when the company’s smartphones face similar struggles in China that they’re seeing in the rest of the world. Read Full Post…
Bottom line: China is likely to lead the list of countries getting national security reviews for its US purchases over the next few years, reflecting Chinese companies’ growing pursuit of foreign technology and other sensitive expertise.
Treasury Department releases annual security report
The past year has been notable for a growing number of Chinese acquisitions in the US attracting national security reviews, and now a new report from the reviewing agency is providing some big-picture numbers about the trend. The headline figure from the new report by the US Treasury Department shows that it reviewed 24 proposed acquisitions of US firms by Chinese buyers in 2014, making China the biggest recipient of such reviews.
At the same time, the report also cast a spotlight on several other trends, including the spread of reviews outside the sensitive high-tech sector and into less conventional areas like real estate. One such deal surprised many last year, when the purchase of the storied Waldorf-Astoria hotel in New York to Chinese insurer Anbang for nearly $2 billion was subject to such a review. Read Full Post…
Bottom line: Fairchild’s decision to negotiate a potential sale of the company to China Resources looks like a bargaining tactic to force previous suitor ON Semiconductor to sweeten its earlier bid.
Fairchild opens sale talks with China Resources
In a move that comes as a bit of a surprise, high-tech chip maker Fairchild Semiconductor (NYSE: FCS) has indicated it is open to selling itself to a Chinese buyer after previously appearing to reject an unsolicited bid from China Resources. The move comes as China looks to beef up its chip-making capabilities through an M&A campaign aimed at buying up companies and their technology in the consolidating global semiconductor market.
Fairchild had previously agreed to be purchased by US rival ON Semiconductor (Nasdaq: ON), and last month it rejected an unsolicited bid from a group that was reportedly led by China Resources, one of China’s oldest and largest conglomerates. So this change of tune could indicate Fairchild is open to acquisition by a Chinese buyer. But it could also be a bargaining ploy to get a higher price from ON. Read Full Post…
The following press releases and media reports about Chinese companies were carried on December 12-14. To view a full article or story, click on the link next to the headline.
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Alibaba (NYSE: BABA) Buying South China Morning Post, Aiming to Influence Media (English article)
The following press releases and media reports about Chinese companies were carried on October 31-November 2. To view a full article or story, click on the link next to the headline.
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Jin Jiang (HKEx: 2006) Prepares to Raise 4.5 Bln Yuan to Improve Capital Structure (Chinese article)
Tsinghua Unigroup to Take 25 Pct in Taiwan’s Powertech (Taipei: 6239) for $600 Mln (English article)
VMWare (NYSE: VMW), Sugon (Shanghai: 603019) Form China JV (Chinese article)
Bright Food Said to Prepare IPO of $1 Bln Manassen Foods Distribution Arm (English article)
LeTV (Shenzhen: 300104) CEO Sells 100 Mln Shares, Lends Proceeds to Company (Chinese article)
Bottom line: Dell’s massive new China commitment could foreshadow a major new tie-up that could see it sell a big stake of itself to a local partner, while Lenovo could be eyeing a major shift to OEM production for its floundering smartphone unit.
Dell bets big on China
Two of the world’s top PC makers are in the China headlines today, with homegrown leader Lenovo (HKEx: 992) and US giant Dell both making major strategic moves. But in a sign of the times, neither item is related to either companies’ core PC business, showing just how quickly personal computers are losing their relevance in the fast-changing gadget world.
Dell’s announcement contains the biggest headline figure, with the company announcing a new commitment to spend a whopping $125 billion in China over the next 5 years. But the Lenovo news is equally intriguing if it’s true, and hints the company could be preparing a major shift for its floundering move into smartphones. That shift would see Lenovo’s smartphone unit build up its business of taking manufacturing orders from third-party brands, a model known contract manufacturing or OEM production. Read Full Post…
China has developed a sudden appetite for global microchip makers, with the latest reports saying several Chinese suitors are pursuing a purchase of the telecoms chip business of US-based MarvellTechnology (Nasdaq: MRVL). This kind of consolidation is sorely needed in the global microchip sector, especially in the telecoms area, where many smaller companies are having trouble competing with global titans Qualcomm (Nasdaq: QCOM) and Taiwan-based MediaTek (Taipei: 2454).
An interesting twist to this story has seen Chinese state-backed firms emerge as some of the main consolidators in this trend, reflecting Beijing’s desire to build up a local chip-making sector. Despite years of trying and billions of dollars in investment, China has yet to find success in building a homegrown chip giant that can challenge big global names like Qualcomm, Intel (Nasdaq: INTC) and Taiwan’s TSMC (Taipei: 2330). Read Full Post…
Bottom line: US national security regulators are likely to approve the potential purchase of Micron by China’s Tsinghua Unigroup, to demonstrate their commitment to fair trade and avoid politicizing cross-border high-tech M&A.
Micron sale likely to get US approval
In the days after reports emerged that China’s Tsinghua Unigroup was planning a bid for US memory chip giant Micron (NYSE: MU), media have been buzzing with speculation over whether Washington might veto a deal on national security grounds. I can understand the logic from both views, and some say recent US allegations of frequent hacking attacks from China could add to arguments for a veto of the deal.
But as a longtime watcher of this kind of transaction, I expect that Washington will ultimately approve the purchase to demonstrate its commitment to fair trade. Such a move would also send a strong signal to Beijing, which is showing growing signs of limiting sales by foreign technology companies in China with its recent introduction of a sweeping new national security law. Read Full Post…
Bottom line: Tsinghua Unigroup’s bid for Micron could move it towards a goal of becoming China’s first world-class IT products and services provider, though it could face potential rival bids and objections from Washington.
Unigroup makes bid for Micron
After puttering around with a few high-profile deals in $1 billion neighborhood, Tsinghua Unigroup has suddenly turned up the volume in its drive to assemble a Chinese IT giant with a massive $23 billion bid for US memory giant Micron (Nasdaq: MU). I’ll be the first to admit I didn’t see this particular deal coming, and I have some doubts about whether it will actually close due to its large size and also potential political sensitivities.
But Unigroup, which has already formed telecoms technology deals with US tech giants Intel (Nasdaq: INTC) and Hewlett-Packard (NYSE: HPQ), has certainly shown it’s serious about try to assemble a major IT products and services provider. China is currently one of the world’s top consumers of such products, which power most of the world’s electronics and internal company networks. But despite that position, the country has yet to produce a company that can compete with such global giants as Qualcomm (Nasdaq: QCOM) in the chip space, and IBM (NYSE: IBM) in IT services. Read Full Post…
The following press releases and media reports about Chinese companies were carried on July 14. To view a full article or story, click on the link next to the headline.
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Chip Maker Tsinghua Unigroup Makes $23 Bln Bid for Micron (NYSE: MU) (English article)
Billionaire Wang Plans for Wanda to Expand Into Finance Industry (English article)
Xiaomi, Partners Planning to Open Privately Funded Bank? (Chinese article)
The following press releases and media reports about Chinese companies were carried on June 10. To view a full article or story, click on the link next to the headline.
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