Deal will lift level of China's semiconductor technology sector, analysts say
State-owned chip manufacturer Tsinghua Unigroup has indicated an intention to bid $23 billion for US-based memory and semiconductor developer Micron Technology, according to media reports on Tuesday.
Analysts said that the deal would support the development of China's memory and semiconductor technology sectors.
Tsinghua Unigroup will pay $21 per share for Micron, one report said, citing an unidentified person close to the matter. The reported offer price is about 19 percent above Micron's closing price on Monday.
Micron, listed on the NASDAQ since January 2010, closed at $17.6 Monday, which was a decline of 50 percent on year-to-date basis.
Unisplendour Corp, listed arm of Tsinghua Unigroup, saw its share price rise by the daily limit of 10 percent to 82.86 yuan ($13.35) on Tuesday.
A public relations employee at Tsinghua Unigroup told the Global Times Tuesday that the organization had no further information to share with the public about the media reports.
Idaho-based Micron did not reply to the Global Times e-mail inquiry by press time, but the company's public relations office was quoted by the Wall Street Journal on Monday as saying that the company had not received a buyout offer.
However, Tsinghua Unigroup is very interested in cooperation with Micron, the company's chairman Zhao Weiguo told Bloomberg on Tuesday. Zhao did not make any further comment on the potential bid.
The possible acquisition of Micron will help grow domestic memory and semiconductor technologies, as the country heavily relies on dynamic random-access memory (DRAM) and NAND Flash imports, Rao Xiaoping, director of the integrated circuit division at Beijing-based CCID Consulting, told the Global Times on Tuesday.
South Korea-based electronics giant Samsung Electronics Co held its lead in the DRAM industry in the first quarter with a market share of 43.1 percent, according to data compiled by New York-based data website statistia.com. Another South Korean company, SK Hynix, accounted for 28 percent, followed by Micron, which held 24 percent.
"We're far behind foreign companies in memory semiconductor technologies," Rao said, noting that Tsinghua Unigroup is likely to compete with Samsung as it aims to become a significant player in the semiconductor industry.
Resilient global demand for smartphones will compel manufacturers to prioritize the production of mobile memory, and the total revenue of the DRAM industry in 2015 will reach $54.1 billion, with an annual growth rate of 16 percent, according to a report by Taipei-based market intelligence provider trendforce.com in December.
"The country's wearable devices market is also booming at the moment, which also requires more advanced mobile memory technologies," Rao said.
Tsinghua Unigroup has been expanding through acquisitions since 2013. The Beijing-based chip producer completed the acquisition of domestic cellphone chip maker Spreadtrum Communications Inc in December 2013. The company also announced in May that it would purchase a majority stake in Hewlett-Packard Co's data networking business in China.
Those moves not only reflect the company's strategy to strengthen its semiconductor production but also could be a sign of the government's intent to develop the information technology sector, Wang Yaqian, an analyst at Beijing-based market research firm iResearch, told the Global Times on Tuesday.
In financial terms, this may also be an opportune time for Tsinghua to make a bid for Micron, whose share price has been declining, Wang said.
Micron's revenues for the third quarter of fiscal 2015 were $3.85 billion, which represented a decline of 3 percent from the same period of fiscal 2014, according to its financial report released in June.
However, there are uncertainties in the potential deal. "Tsinghua Unigroup will need to get US regulators' approval, which may take more than a year," Wang said.
