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: Kingsoft’s write-down in the value of its investments in 21Vianet and Xunlei could auger a sale of its stakes in both companies, following a failed privatization bid for 21Vianet and little hope for a Xunlei recovery.
Kingsoft writes down 21Vianet, Xunlei investments
A week after data center operator 21Vianet (Nasdaq: VNET) became the second US-listed Chinese company to abandon its privatization bid, one of the financial backers that was leading that bid is providing some hints at what led to its actions. That’s my interpretation of the new disclosure from software maker Kingsoft (HKEx: 3888) saying it has written down $125 million related to slumps in the values of its investments in 21Vianet and also in struggling online video downloading site Xunlei (Nasdaq: XNET). Read Full Post…
Bottom line: 21Vianet could get a new privatization offer from Tsinghua Unigroup by year end, following withdrawal of a previous bid; while Xiaomi chief Lei Jun may start selling non-core assets to raise money for his struggling company.
Buyout group scraps 21Vianet bid
Data center operator 21Vianet (Nasdaq: VNET) has finally done the inevitable and formally scrapped its de-listing plan, becoming the second company to do so among some 40 US-listed Chinese firms trying to privatize from New York. This particular move has been coming for a while now, and signs appeared as early as May that 21Vianet was abandoning its privatization plans. But new Chinese media reports are casting some light on why this particular bid collapsed, and it appears the reasons are linked to struggling smartphone maker Xiaomi, whose chief and co-founder Lei Jun was helping to finance the deal. Read Full Post…
The following press releases and news reports about China companies were carried on June 28. To view a full article or story, click on the link next to the headline.
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Autohome (NYSE: ATHM) Shareholding Settles, With Ping An as New Chairman (Chinese article)
A Slice of Qihoo’s (NYSE: QIHU) $9.3 Bln Buyout for Sale on China Streets (English article)
Bottom line: Qualcomm and Meizu are likely to reach a new licensing agreement after the former sued the latter, pressuring Meizu’s profits, while Taipei will reach a compromise with local chip makers that would allow mainland investment in the sector.
Qualcomm sues Meizu over chip license
Two high-tech chip stories are in the headlines today, reflecting the complex dynamics now taking place in the market between China and the rest of the world. In both cases, the common theme is that China wants to build up its own manufacturing base for high-tech chips that power everything from cars to smartphones and home appliances. It’s already the world’s biggest consumers of such chips, since it manufactures many of those devices. But it doesn’t design or produce most of the actual chips, which is an extremely high-tech business that also carries high profit margins. 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…
The following press releases and news reports about China companies were carried on April 19. To view a full article or story, click on the link next to the headline.
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Alipay Owner Ant Financial to Start Shanghai IPO Process as Soon as 2016 (English article)
Tencent (HKEx: 700) CEO Ma to Donate 100 Mln Company Shares Towards Charity (company announcement)
Chinese Group Wants to Seal AC Milan Takeover by June (English article)
Siliconware Precision (Taipei: 2325) Says $1.7 Billion Tsinghua Deal Is on Hold (English article)
The following press releases and news reports about China companies were carried on April 14. To view a full article or story, click on the link next to the headline.
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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: Chinese buyers may be forced to abandon their pursuit of chip makers in the west and Asia, following the latest collapse of a deal for a stake in Western Digital over concerns of a national security veto by Washington.
Unigroup scraps Western Digital investment
Globally acquisitive chip makers Tsinghua Unigroup and sister company Unisplendour are quickly becoming the belles at the ball who can’t find a mate despite their huge dowries. That’s the bottom line in this tale of China’s dream of building a global semiconductor chip giant, which has just received a major setback with word that Unisplendour has formally dropped its bid to buy 15 percent of US hard drive maker Western Digital (Nasdaq: WDC).
If Unisplendour and Unigroup are the wealthy belles at the ball in this story, then the character intent on spoiling any potential unions is Washington, which worries such marriages could threaten national security by giving Beijing sophisticated technology. Taipei is also looming as another potential spoiler, as other headlines say the government there will give unprecedented scrutiny to a series of similar proposed stake purchases of local chip makers by Unisplendour and Unigroup. Read Full Post…
