IEEE Solid-State Circuits Magazine - Fall 2017 - 8

CHINA CON N ECTION

C. Patrick Yue

Tian Lu

China's Latest Overseas M&A in the Semiconductor Industry

The historic flood of merger and
acquisition (M&A) agreements that
swept through the semiconductor
industry during the past two years
has slowed to a trickle. The combined value of about a dozen transactions announced in the first half
of 2017 was US$1.4 billion, according to the market research firm IC
Insights [1]. That is a significant drop
from US$4.6 billion in the first half
of 2016 and a whopping US$72.6 billion in the first half of 2015. Despite
the slow start to M&As in 2016, several large transactions announced
during the second half of the year
pushed the total value of deals to
near US$100 billion, within striking
distance of the all-time record of
US$107.3 billion set in 2015. Despite
the existence of several pending or
rumored deals, including the pending sale of Toshiba's memory chip
business, it is unlikely that a second
half of M&A surge will emerge to
bring the value of transactions for
the year anywhere close to either
2016 or 2015, IC Insights said.

Dilemma: Restrictions on the
Overseas M&As of Chinese Capital
The acquisition of overseas semiconductor enterprises with key technical
capability is part of China's strategy
to improve the domestic semiconductor industry chain. The M&A boom
in the semiconductor industry is the
general trend of consolidation and

Digital Object Identifier 10.1109/MSSC.2017.2748298
Date of publication: 16 November 2017

FA L L 2 0 17

economic restructuring. Chinese companies are becoming a major force in
the expansion of the global semiconductor industry, and the growth of
China's semiconductor industry will
have a profound impact on the global
semiconductor industry. In the past
two years, China has spent a lot of
money and effort on its semiconductor industry, including independent
construction and overseas M&As.
According to the incomplete statistics of Jiweinet, the total volume of
transactions of China's semiconductor
overseas M&As (completed) so far has
exceeded US$11 billion.
The successful cases of China's semiconductor overseas M&As include the
following most notable transactions:
■ Beijing Jianguang Asset Management
(JAC Capital) bought NXP Semiconductor's Standard Products business
for US$2.75 billion and its RF Power
business for US$1.8 billion.
■ Jiangsu Changjiang Electronics Tech
Company bought STATS ChipPAC
for US$780 million.
■ Shanhai Capital completed its acquisition of Analogix Semiconductor for US$500 million.
■ Integrated Silicon Solution Inc.
(ISSI) was acquired by Uphill Investments for US$731 million.
■ CITIC Capital Holdings, Hua Capital Management, and investment
Goldstone bought OmniVision for
US$1.9 billion.
■ Nantong Fujitsu Microelectronics
(NFME) bought Advanced Micro
Devices' (AMD's) semiconductor
assembly and testing services for
US$371 million.

IEEE SOLID-STATE CIRCUITS MAGAZINE

Tsinghua Unigroup bought New
H3C Group (New H3C) for US$2.5
billion.
There are also a number of failed
attempts: Fujian Grand Chip Investment planned to buy Aixtron for
€670 million, Ingenic Semiconductor
to buy OmniVision for ¥12.62 billion, Gigadevice to buy ISSI for ¥6.5
billion, Zhejiang Wansheng to buy
Analogix Semiconductor for ¥3.75
billion, China Reform Holdings Corporation to buy Lattice for US$1.3
billion, and China Reform Holdings
Corporation to buy MEMSIC Inc. for
¥1.65 billion.
IC Insights pointed out that governments around the world are scrutinizing
these deals, which is playing a role in
reducing the number of completions.
Based on the political climate in the
United States and other western nations,
Chinese entities are going to have a
hard time buying Western semiconductor firms, which may make them
hesitant to throw their hat in the ring
on possible deals. For instance, Germany
introduced new rules in July such
that trading in sensitive sectors would
be halted if the country's interests were
to be affected.
China has bought some semiconductor business overseas in the past,
but the semiconductor industry is
a sensitive industry. The approval process is complicated, and hence the
number of acquisition cases have
been reduced. In addition, the Committee on Foreign Investment in the
United States (CFIUS) has objected to
at least nine foreign takeovers of
U.S. companies so far this year. This
■

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