China’s state-backed companies to continue driving global semiconductor M&A activity
State-owned companies expected to continue strategic investments in support of national policy
Mainland China is expected to drive more mergers and acquisitions in the global semiconductor industry this year, which could redraw the competitive landscape in this high-tech sector.
“The country is interested in all parts of the semiconductor supply chain, and is keen to leverage its ample capital supply to elevate the capabilities of its domestic industry quickly,” Bernstein senior analyst Mark Li said in a report on Monday.
Li expected this state-backed “shopping spree” to continue going strong this year, following the central government’s introduction in June 2014 of a national policy to infuse vast amounts of capital to develop an advanced local chip manufacturing supply chain.
The China Integrated Circuit Industry Investment Fund was established in September that same year to support the domestic semiconductor industry’s expansion initiatives.
The policy’s aggressive target is for the mainland chip industry to record a 20 per cent compound annual growth rate by 2020.
“As China consumes US$169 billion (HK$1.309 trillion) worth of chips every year and the majority of them are imported, replacing imports with local production provides strong economic motivation,” Li said.