Acquisition by Tsinghua will not Receive Approval due to National Security Reasons

Published By : 22 Jul 2015 | Published By : QYRESEARCH

The stock prices of Micron went up by around 15 per cent in the last week prior to the report released by Wall Street Journal mentioning that the state owned semiconductor from in China Tsinghua is busy on a US$23 billion worth of takeover bid for the firm. However, both the firms Tsinghua and Micron have declined to comment. According to sources Micron has informed Tsinghua Unigroup that this offer is not possible as the authorities in the United States will object to the deal on the basis of national security related concerns.

Micron recently sought advice from a bank. However, the firm did not hire one as it is not yet serious considering the offer from Tsinghua, people with the knowledge of the matter commented. However, some time back the semiconductor company Tsinghua stated its awareness about a sale but did not demonstrate a proper give. The tech industry in China, which is backed by the cash rich domestic government was actively seeking to grow their stake in the chip makers in order to get access to the closely guarded chip manufacturing technology.

The reasons for CFIUS to halting any mergers or acquisitions between Micron or other Chinese firms are simple, as the Micron being the American firm is the last United States based DRAM manufacturers that constructs chips and computer modules for advanced weapons in the country.

Currently, Tsinghua Unigroup has emerged the top chip making business in China after its acquisition of Spreadtrum and RDA Microelectronics. This firm is now managed by the Tsinghua University based in Beijing that counts the President Jinping as one of its alumni and is also backed by the country’s central government. According to a Harvard Professor, an acquisition can help China to catch up with the giants in the industry such as Samsung and Intel.
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