China-based companies are aggressively investing in global semiconductor companies
In prior parts of this series, we talked about a possible buyout of SanDisk (SNDK) as one of the many acquisitions happening in the semiconductor space. China-based Tsinghua Holdings subsidiary Unisplendour acquired a 15% stake in Western Digital (WDC) for $3.8 billion this month.
In mid-July 2015, Unisplendour made a $23 billion takeover offer to Micron. However, the deal has been clouded due to security reasons. In May 2015, Unisplendour acquired a 51% stake of Hewlett-Packard’s (HPQ) H3C Technologies.
China wants to develop its native semiconductor industry
Chip manufacturing is a space where China lags significantly. In October 2014, the National Integrated Circuitry Industry Investment Fund was formed in China with the aim to build a native semiconductor sector. Ma Kai, one of four vice premiers of China (FXI), announced semiconductors as a key sector in September 2013. Since then, there has been considerable merger and acquisition activity in this space. According to the South China Morning Post, in the past 1.5 years, Chinese companies spent ~$5 billion in five major chip-related acquisitions. The majority of these deals got state funding.
The investments and acquisitions by Unisplendour indicate that China aims to improve its self-sufficiency in the semiconductor space. According to the Wall Street Journal, China spends ~$13 billion every year to buy chips. Among the leading semiconductor suppliers to China, Intel (INTC), Qualcomm (QCOM), and Samsung Electronics (SSNLF) top the list.
Owing to China’s keen interest and demand in the semiconductor space, a China-based conglomerate would be an interesting choice to acquire SanDisk.