Chinese chipmaker Tsinghua prepares $23B bid for Micron Technology

By Shannon Davis, Web Editor

China’s state-owned Tsinghua Unigroup Ltd. is preparing a $23 billion bid for chipmaker Micron Technology, in what analysts say would be the biggest Chinese takeover of a U.S. company.

Tsinghua, China’s largest state-owned chip design company, is prepared to bid $21 per share for Micron, according to Dow Jones.

As of Tuesday, a Micron spokesman told Reuters that the company had not yet received an offer, while Tsinghua chairman Zhao Weiguo told Bloomberg that the Chinese company was “very interested in cooperation” with Micron.

Tsinghua’s potential purchase of Micron is regarded as a strategic move to help the advancement of China’s own chip sector. The country currently has no major home-grown memory makers, according to Reuters.

Micron is the last remaining U.S. producer of DRAM memory chips, and any foreign takeover would still have to pass a review by the Committee on Foreign Investment in the United States, to examine the national security implications of the deal. The deal would also need to be examined by the Chinese National Development and Reform Commission.

This would not be the first significant consolidation in the memory sector this year. In May, Hewlett-Packard sold a 51 percent stake in its data-networking business to Tsinghua for approximately $2.3 billion.

What the analysts are saying

“Valuation appears low as a potential $21 a share bid is 8.3 times fiscal year PE or low end of the historic range of 7 to 15 whereas Micron was at $32 just 5 months ago,” UBS analyst Stephen Chin told MarketWatch.

MarketWatch speculated that a cheap valuation could encourage other companies to launch their own bids.


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10 thoughts on “Chinese chipmaker Tsinghua prepares $23B bid for Micron Technology

  1. J

    Bad move for the US.
    I would think that the US government would be very sensitive to letting such advanced technology get in the hands of communists.

    Micron is a great American company, and as the article points out the last US memory maker.
    They have advanced collaborations on flash with Intel, and are working on nearly the latest nm nodes.

  2. Dev Gupta

    SMIC tried for 12 years to catch up with the latest nodes and in spite of huge subsidies from the PRC who also arm twisted TSMC to help SMIC, failed to catch up with the latest nodes. Having realized the limits of Chinese technologists to develop state of the art technologies on their own, last year the G. of PRC decided to go the M&A route. This is the background of Tsinghua Unigroup a largely Govt funded VC using the best minds of China’s premier university to devise strategy. Since then this VC with strong patronage from the G. of PRC has attracted contributions from Intel and promise to help SMIC get to 14 nm as “tribute ( protection money ) ” to continue doing business in China.

    So upbranding ( see headline ) Tsinghua U. Unigroup, the mostly Chinese Govt funded tech VC, as a “CHIPMAKER” is a deliberate and shameless attempt by this US based reporter / editor to curry favor with the rising monster, perhaps in the hope of a future “baksheesh”. It is these TROJAN HORSES operating under the cover of “Free Market” who have been transferring prosperity from the US to China and before that to Japan.

    Due to their political clout, no industry in the US, no matter how hard the technologists try, is immune from their depredations. So it is a shame that Solid State Technology, now the sole printed news / opinion maker of our industry in which the US once had unquestionable and well deserved dominance, too has fallen under their control.

    1. J

      Dev Gupta, well put.

      This is a Chinese government funded operation, not some free market aquisition plan.

      And the US should be wary !

  3. Dirk Doyle

    Sunday eve 60 Minutes rebroadcast its 2010 episode on the rare earth metals market takeover by China. The US should be vary wary. Considering how the Chinese have behaved with the rare earth monopoly more of the same behavior is what we should expect.

  4. don hilliard

    … “help the advancement” ??? How about it’s an attempt to purchase the entire capability outright.

    This is similar to the holding company Hanergy “enhancing” its solar thin film technology by purchasing every major US thin film solar development company that was available. In this type of process, any center of excellence will become dysfunctional.

    It would be quite ironic, given Micron’s history of very high aggressiveness in protecting its IP.

  5. JL Orwell

    Dev Gupta… what you describe has been going on for 25 years and the impact has been devastating. Its extremely disheartening to watch the entire US tech sector commit treason by being THE key facilitator of US tech transfer to CH (including via allies like Israel)…with the press often strongly supporting this. Couple this with the investment banks and VCs plowing money into CH start ups and their economy to ensure the above…there is NO historical precedent. If the other side was Russian or Iranian there would be certain groups screaming and racing to stop any transaction. For some very odd reason, the American tech world….which knows far less about CH strategies and intentions…is the biggest supporter of this transfer. Naive AND “backsheesh” seeking technologists, venture capitalists, journalists, business people continue to target and want to deal more with the CH gov than their own. Just go to Silicon Valley and see for yourself. If the same setup existed in CH their government would have cracked down and locked up half of those type of people by now. Our gov, including now the DoD, has to beg and plead for “cooperation”. Look at all of the US, Western free lance/”consultant” technologists, technology trade associations, consulting companies, etc. lining up to support the CH with the familiar chorus “you cant miss the opportunity” repeated as if they are chanting a hymn in a church. Again, if they were CH the CH gov would have detained them long ago.

    In the end however the CH cannot be blamed for increasing, rampant U.S. BABY BOOMER corruption, greed, naivette and a deep seated hatred for their own gov or concept of a “nation-state”– they were brought up on “globalism”, “break the rules!”, etc. culture and in an odd twist of fate their main patron has been a Comm government. They go out of their way to follow their rules because they know there will be consequences if they dont. Labels really are meaningless however. The CH are endowed with a practical, hard work, wealth creating mentality and there is ZERO reason for them to play by “western rules.” Their policy makers are some of the best and brightest they have– and, unlike the US, are not run by religious (the crazed “end of days” evangelicals) and/or free market zealots. The CH are justifiably seeking to completely decapitate the old “Anglo-American-Judeao guard” that is behind what you describe….they (US/western, etc. backsheesh seekers) are simply looking after and supporting their own interest and apparently have no problem becoming CH tech compradors (買辦) managing their new US based assets….pretending they are somehow going to make money in China one day. The sacrificial lambs here have been US citizens who have had their middle class way of life destroyed…and their taxes confiscated to subsidize other countries economic and technology programs. The western 1% doesnt have a problem with this scenerio…..and as long as everyone can watch the NFL, go to a casino or buy a lottery ticket they will continue to be distracted and not take care of the real problem….and it certainly isnt in Iran, Russia or China. Of course, eventually the CH will not need these people– thats why they are sending 100,000s of students to study in the US to eventually play that role in the US. From a CH perspective, its a great opportunity to create and control wealth, securing a strong hegemonic position without the need for war AND while also conquering centuries-old foes that once rampaged through and pillaged CH “not that long ago.” They are using their own sword (free market and free trade religiousity, short termism, corruption and greed) against them. Why shouldnt they seek to overthrow this western status quo when its proven to be weak, impoverished and openly supportive of their own demise? Again, dont blame the CH…..not their fault or problem.

    Samuel Huntington summarized in The Clash of Civilizations and the Remaking of World Order, “As the pace of modernization increases, however, the rate of Westernization declines and the indigenous culture goes through a revival.”

  6. Concerned Citizen

    Are you kidding. We already gave them the IBM PC (Lenovo), which could be why it’s easier for them to hack us….come on people, when are ethics better than money…do we have to give everything away….dangle the golden carrot and people will jump at it….anything for money…………….sickening……

  7. w. carr

    The offer from the CH controlled VC for Micron should be the ultimate wake up call to the SEC to intervene. We must realize that the only real solution for the CH-US trade deficit is for the US to compete directly in the marketplace and not compete only with trade tariffs. Please SEC, canl’t you see that the US has only this last card to play: We must focus on upgrading our workforce, focus on professional education, recognize that the US cannot go much further without MANUFACTURING. Automation and internal focus on high technology applied to our own sources of production is the only way to compete moving forward.
    It is already clear that with intelligent robotics and a more skilled workforce, the US can compete very well with CH. But we must have the US government support and realization that is the standard of living for the middle class worker in America that is at stake.
    And please, let’s stop selling off the few precious manufacturing assets that we have been able to hang onto.

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