Bottom line: Huawei’s new push into IT services could do well due to the company’s strong background in telecoms products, and could see it form a major partnership in the area with a big global player.
IT services tie-up ahead for Huawei?
Networking equipment giant Huawei is continuing its diversification, with word that it’s planning a major push into the market for information technology (IT) services that could put it into direct competition with such giants as IBM (NYSE: IBM) and Hewlett-Packard (NYSE: HPQ). But perhaps more intriguing is the possibility that Huawei could form a major partnership with one of the big foreign names, amid a rise in such pairings due to restrictions on foreign firms under China’s new national security law.
Huawei began its life as a maker of networking equipment for big telecoms carriers, but more recently has tried to diversify as the global market for those products slows. It has pushed into networking equipment for enterprises, and more recently has found growing success with smartphones. But IT services has remained a relatively small portion of the business, expected to reach $2 billion in sales this year. That would be just a tiny portion of the 288 billion yuan, or about $45 billion, that Huawei posted in revenue last year. Read Full Post…
Bottom line: The latest downbeat remarks from Unigroup’s chairman after a visit to the US indicate the company has given up on its bid to buy Micron, though it could potentially relaunch the effort after next year’s presidential elections.
Unigroup’s Micron bid looks dead
I wrote several weeks ago that a bid by China’s Unigroup to buy US memory chip giant Micron Technology (Nasdaq: MU) had become the victim of politics, and now it appears the deal is finally dead. Or at least it’s on life support, with little hope of resuscitation. That’s my interpretation, following the latest reports that say Unigroup’s chairman has given remarks that look quite pessimistic after returning to China from a last-ditch US visit to try to save the deal.
This deal looked quite interesting when it was first reported back in July, and would have been worth some $23 billion, marking the biggest-ever acquisition of a US company by a Chinese counterpart. But political sensitivities quickly surfaced due to Micron’s status as the biggest US maker of memory chips used in most electronic devices and also in the defense industry. Read Full Post…
The following press releases and media reports about Chinese companies were carried on September 1. To view a full article or story, click on the link next to the headline.
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Micron (Nasdaq: MU) Deal in Suspense as Unigroup Exec Returns Home (Chinese article)
Focus Media Aims to Relist Via Hedy (Shenzhen: 002027) Acquisition (English article)
Internet Entrepreneurs Back Chinese Tesla (Nasdaq: TSLA) Rival NextEV (English article)
Front-Line Research Shows Many Buyers Returning Xiaomi’s Redmi Note (Chinese article)
Ageas to Sell Hong Kong Unit to China’s JD Capital for $1.4 Bln (English article)
Bottom line: Unigroup’s bid for Micron may be near death due to lack of interest from Micron and growing US political opposition, though Unigroup could revive its pursuit after next year’s presidential election.
Unigroup abandons Micron bid?
The blockbuster deal that had China’s Tsinghua Unigroup mulling a bid for leading US memory chip maker Micron (Nasdaq: MU) appears to be near death, with neither side commenting on the situation more than a month after news of the courtship first broke. It’s now been 4 weeks now since we’ve heard anything on the $23 billion deal from either Micron or Unigroup, the ambitious microchip maker connected to Tsinghua University, China’s leading sciences university.
But Micron’s share price hasn’t stayed quiet during that time, and has moved steadily downward to its current level of about $17.20. That represents a drop of 14 percent from a recent high of $19.90 in late July, when investors were still hoping that Unigroup would make a bid at $21 per share. While neither side has commented on the deal lately, one powerful US senator did come out last week and express his opposition. Read Full Post…
Bottom line: The purchase of Micron by Tsinghua Unigroup offers a good chance for Sino-US confidence building if Washington signals it will fairly consider such a deal and Unigroup demonstrates its actions are commercially driven.
Micron sale offers chance to boost Sino-US trust
A potential mega-deal that would see China’s Tsinghua Unigroup buy leading US memory chip maker Micron Technology (Nasdaq: MU) could become a major trust-building exercise between China and Washington if handled properly, but could also quickly end in an angry war of words if the opposite occurs. Both sides need to take important steps to ensure fair trade in the case, which is sensitive because it involves the acquisition of a US high-tech leader by a company with close ties to China’s top science university.
For its part, Unigroup could take steps to show its independence from Tsinghua University, and more broadly to show that it is a commercially-focused business that doesn’t make decisions based on government orders or support. For its part, Washington could signal it is willing to consider a deal that appears to pose no threat to national security, even though it would see a major technology company taken over by a Chinese peer. Read Full Post…
Bottom line: Micron’s decision to discourage a buyout offer from China’s Unigroup is a bargaining tactic due to high regulatory risk, and Unigroup is likely to come back with a sharply raised offer in the next 2 weeks.
Micron discourages China bid
A week after splashing into the headlines, a potential bid by China’s Tsinghua Unigroup for Micron Technology (Nasdaq: MU) is being cast into doubt, with word that the leading US memory chip maker is worried such a deal would get vetoed by Washington on national security grounds. The development comes as a slight surprise to me, as I previously predicted that such a deal would ignite some controversy but would ultimately get approved by the Committee on Foreign Investment in the United States (CFIUS), which conducts reviews for national security risks.
It’s quite possible that Micron really doesn’t want to proceed with talks because it believes there’s a big enough chance that such a deal could get vetoed in Washington. But that said, it’s also quite possible that Micron could quickly resume the talks if Unigroup offers a higher price than the previous $21 per share being discussed, and that all of this is just a bargaining tactic. Read Full Post…
The following press releases and media reports about Chinese companies were carried on July 21. To view a full article or story, click on the link next to the headline.
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Micron (Nasdaq: MU) Does Not Believe Deal With Tsinghua Is Possible – Sources (English article)
Huawei’s H1 Revenue Up 30 Pct Year-on-Year at $28 Bln (English article)
Travel Site Tongcheng Launches 100 Bln Yuan Promotion, Links With Wanda (Chinese article)
Uniqlo Leaves JD.com (Nasdaq: JD) After 3-Month Trial (English article)
Bottom line: Tsinghua Unigroup could end up scrapping its plans to bid for Micron due to fears of political resistance, while a new mobile OS that it’s backing is probably getting support from Beijing but is likely to fail.
China bid for Micron meets with early resistance
The recently acquisitive Tsinghua Unigroup is in a couple of headlines today, as the politically-connected company chases its dream of becoming China’s first IT products and services giant. The first headline has the company investing $100 million in a company developing a mobile operating system (OS) that could someday rival Google’s (Nasdaq: GOOG) Android and Apple’s (Nasdaq: AAPL) iOS. The second hints at the political resistance that Unigroup could meet as it reportedly gets set to make a $23 billion bid for leading US memory chip maker Micron (Nasdaq: MU), with reports that a powerful senator has concerns about the deal. 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…
Bottom line: Cisco’s dismissal of several top China executives reflects its struggles in the market, and the situation will only improve if it takes a more conciliatory approach to address Beijing’s national security concerns.
Cisco lays off China execs
Beijing’s ongoing clampdown on foreign tech companies over national security concerns is taking a toll on Cisco (Nasdaq: CSCO), with word that the US networking equipment giant is laying off several of its top local executives due to falling China sales. This particular development doesn’t come as a huge surprise due to Beijing’s recent obsession with national security and suspicion of foreign tech companies. But Cisco’s struggles do contrast sharply with that of Hewlett-Packard (NYSE: HPQ), which appears to be faring better in China due to its more conciliatory approach to address Beijing’s concerns.
Bottom line: Tsinghua Unigroup’s latest investment in an online lottery ticket seller hints that it may add Internet services to its growing list of high-tech products and services through separate tie-ups with Intel and HP.
Unigroup invests in 500.com
A previously little-known company connected with China’s leading science university has made headlines over the last year through major new tie-ups with global tech titans Intel (Nasdaq: INTC) and Hewlett-Packard (NYSE: HP), which makes its latest investment just slightly puzzling. That investment is seeing Tsinghua Unigroup pour a relatively modest but still significant $124 million into 500.com (NYSE: WBAI), a New York-listed Chinese firm that sells lottery tickets over the Internet.
I’m being just slightly whimsical in tying Unigroup’s latest purchase to its much larger recent tie-ups with Intel and HP, which I’ll recap shortly. But that said, Unigroup has rapidly emerged as a player to watch in a China’s underperforming domestic microchip and IT services sectors, and most of its high-profile investments since it first moved into the spotlight have been centered on efforts to assemble a homegrown Chinese giant in those spaces. Read Full Post…
