China continues to Eye Foreign Chip Companies

Published By : 02 Dec 2015 | Published By : QYRESEARCH

China dominates the global semiconductor industry. In order to drive their semiconductor industry further, China has adopted many aggressive strategies. For example, recently, news showed that China is trying to pool in foreign talent and has tried to recruit professors and students from Japan, according to people with the knowledge of the matter. Furthermore, the country is planning to build the world’s largest semiconductor plant in the world.

In order to further fuel the semiconductor industry in China, the nation’s interest in foreign chipmakers has now reached a record year of deals. This has been considered by the rivals as sign that shows mergers and acquisitions in the future will get even more competitive and companies that will be targeted will get even more expensive. This year, chipmakers declared more than US$80 bn worth of mergers and acquisitions. Furthermore, chip making companies are now acquiring peers to expand capacity, which is ahead of explosion in demand for different types of semiconductors driven by the Internet of Things.

According to Hidetoshi Shibata, the CFO of Japan’s Renesas Electronics Corp., Chines companies pay a lot and the concern is that they tend to hike up the mergers and acquisitions valuation and become huge rivals.

The strategies of chipmakers have witnessed a divergence since the year 2011 as the peak of the industry’s mainstay market revolved around personal computers. Many chipmakers are betting on energy efficient chips for phones, hefty server chips that power databases, fail safe chips for vehicles, or chips for home goods that fall under the IoT technology.

This has led to companies merging to pool skills and technology and early movers are fearful of lagging behind.  China’s role in the global semiconductor industry has been as much to confuse as galvanize. China’s ambition are now making it difficult to project how the competitive landscape in the industry will shift.

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