The following press releases and news reports about Chinese companies were carried on February 23. To view a full article or story, click on the link next to the headline.
══════════════════════════════════════════════
Tsinghua’s $2.6 Bln Taiwan Deals to Face Unprecedented Government Scrutiny (English article)
Huawei Debuts MateBook Notebook PC at Mobile World Congress (Chinese article)
HK Lays Out Case Against Short Seller Citron Research’s Andrew Left (English article)
ICBC (HKEx: 1398) Says Cooperating With Madrid Anti-Money Laundering Probe (HKEx announcement)
Parcel Delivery Service SF Express Prepares for Domestic IPO (Chinese article)
Bottom line: Western Digital’s planned sale of 15 percent of itself to a Chinese buyer stands a 50-50 chance of getting vetoed by Washington on national security grounds, which could throw Western Digital’s planned purchase of SanDisk into doubt.
Western Digital’s China tie-up unraveling?
Many have been writing about China’s mega purchase last year of a big stake in computer hard drive giant Western Digital (Nasdaq: WDC) as if it’s a done deal, even though the $3.8 billion tie-up has yet to formally close. Even the buyer, Tsinghua Unisplendour, appeared to believe its purchase of 15 percent of Western Digital was unlikely to attract controversy, and was already using the US company as part of plans to build up China’s first global memory chip giant.
But the tie-up could fall victim to US national security concerns, following Western Digital’s new disclosure that it’s extending a timeline for the deal to close due to scrutiny from Washington. It’s probably too early to say this particular deal will collapse, even though Western Digital was apparently caught off guard by the scrutiny it’s now receiving from the Committee on Foreign Investment in the US (CFIUS), which reviews major cross-border high-tech deals for national security risks. Read Full Post…
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: New remarks by Taiwan’s likely new president indicate a flurry of recent new cross-Strait chip tie-ups could be delayed, but most are likely to ultimately get approved in a new era of more pragmatic cross-Strait relations.
Taiwan presidential candidate cautious on new China chip tie-ups
In a move that I predicted earlier this week, Taiwan’s likely next president is pouring cold water on a nascent series of tie-ups between its fragmented high-tech chip industry and cash-rich partners from mainland China. The latest reports cite Tsai Ing-wen, presidential candidate of the opposition Democratic Progressive Party (DPP), calling a recent series of planned Chinese investments a “huge threat” to the island’s large but also struggling semiconductor industry.
Even I was a bit surprised by the alarmist tone of Tsai’s comments, as I previously predicted that she was likely to call for a slowdown in the recent series of new deals but not an outright halt. (previous post) Beijing was also somewhat surprised, and a top official called on Taiwan not to politicize such commercial transactions. Read Full Post…
Bottom line: Setbacks in 2 major global chip acquisitions by Chinese buyers show the Chinese are likely to be seen as foreigners by western manufacturers who would prefer to be bought by more familiar hometown rivals.
China chip buyers hit resistance in US, Taiwan
Two new developments in China’s global chip-buying spree are showing that political opposition isn’t the only obstacle Chinese buyers will encounter in their quest to acquire foreign technology. The Chinese could also face competition from rival suitors, with word that recent bids by the fast-growing Tsinghua Unigroup and newcomer China Resources have both hit such resistance.
In the first case, Unigroup’s recently announced plan to buy 25 percent of Taiwanese chip tester Siliconware Precision Industries (Taipei: 2325) has been followed by a new counter bid from Taiwan’s own Advanced Semiconductor Engineering (Taipei: 2311). The second case has US-based Fairchild Semiconductor (Nasdaq: FCS), which is in the process of merging with ON Semiconductor (Nasdaq: ON), rebuffing a higher rival bid from China Resources. 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…
The following press releases and media reports about Chinese companies were carried on November 17. To view a full article or story, click on the link next to the headline.
══════════════════════════════════════════════
Tsinghua Unigroup to Invest $47 Bln to Build Chip Empire (English article)
Bottom line: Unigroup’s aim of building a telecoms and memory chip giant through strategic tie-ups and plant construction could provide challenges for global leaders like Qualcomm and Samsung.
Unigroup affiliate eyes new chip factory
Tsinghua Unigroup has leaped from obscurity to become a major headline grabber over the last 2 years, by snapping up a series of global and domestic assets aimed at building a Chinese chip maker that could someday rival the likes of Qualcomm (Nasdaq: QCOM) and Intel (Nasdaq: INTC). That spending binge continues this week with 2 new headlines, led by comments from Unigroup’s top executive saying he would consider a bid for Taiwan’s MediaTek (Taipei: 2454), one of world’s top makers of chips used in smartphones. In the other headline, a China-listed Unigroup affiliate has just said it plans to raise up to 80 billion yuan ($12.7 billion) to build new chip plants.
All of this comes just a week after Unigroup announced another $600 million deal to purchase a quarter of Taiwan’s Powertech (Taipei: 6239), which engages in the relatively low-end business of test and assembly services for microchips. (previous post) These latest headlines are the clearest indication yet that Unigroup and its affiliates have strong backing from Beijing. I say that because most of the funds being raised in a newly announced private placement by Tongfang Guoxin Electronics (Shenzhen: 002049) are coming from state-run sources. Read Full Post…
Bottom line: Taiwan should quickly approve Tsinghua Unigroup’s plan to buy a quarter of Taiwan’s Powertech for $600 million if it finds no security issues, which could help to accelerate cross-Strait high-tech M&A deals.
Unigroup, Powertech in cross-Strait microchip tie-up
One of the biggest equity tie-ups to date between high-tech companies across the Taiwan Strait was announced late last week, when the acquisitive Tsinghua Unigroup said it planned to buy a quarter of Taiwanese chip company Powertech (Taipei: 6239) for around $600 million. The deal would provide Unigroup with valuable production assets in its drive to build a major new global chip maker, and would give Powertech cash and other resources as it fights for advantage in the highly competitive chip sector.
And yet despite the obvious rationale for such a deal, only a handful of similar tie-ups have occurred to date due to the risks of getting vetoed by Taiwan on national security grounds, since they involve sophisticated technology. Read Full Post…
Bottom line: Intel’s massive spending plan to convert its Dalian CPU plant to memory chip production looks like part of its growing alliance with Tsinghua Unigroup, which is probably helping to finance the conversion.
Intel overhauls Dalian chip plant
Just days after struggling US chip maker AMD (NYSE: AMD) announced plans to largely sell off its Asia manufacturing operations, larger rival Intel (Nasdaq: INTC) is doing the opposite with plans to invest up to $5.5 billion in one of its main Chinese fabs. But in an interesting twist to the story, Intel is spending the big money to convert the fab, which was originally designed to make integrated circuits for PCs, to memory chip production.
This unusual twist is just the latest move that shows Intel is placing its bets on China, as it plays catch up to other chipmakers like Qualcomm (Nasdaq: QCOM) that have discovered the future of computing lies in the mobile telecoms space. As part of its catch-up attempts, Intel has formed a major and growing alliance with Beijing-based Tsinghua Unigroup that is squarely focused on chips used in telecoms and IT services. Memory chips would fit nicely into that equation, since such chips are also a critical part of most IT products, ranging from smartphones to complex networks. Read Full Post…
