Setbacks don’t derail China’s semiconductor ambitions
Analysts note spike in formal and informal Chinese takeover offers
A series of semiconductor-related deals abandoned due to security issues has raised concerns over Beijing’s ambitious chip industry development plans and greater scrutiny of mainland Chinese investments in the United States, according to recent media reports.
Some analysts, however, see that as a “serious misreading” of the situation.
In a report, Nomura analyst Huang Leping largely attributed the derailed Chinese acquisitions – including the termination of Unisplendour’s US$3.8 billion investment in Western Digital last week – to the inexperience of the mainland firms in communicating with the Committee on Foreign Investments in the United States (CFIUS).
An inter-agency body, CFIUS assesses the national security implications of mergers, acquisitions and takeovers that could result in foreign control of any US business.
China is the country with the most deals placed under CFIUS review. Mainland Chinese companies accounted for 24 of the 147 cases filed with CFIUS in 2014, according to the committee’s latest annual report published on February 19. They accounted for 21 in 2013 and 23 in 2012.
A greater number of Chinese deals now target US technology assets, and the potential transfer of critical US technology is one of the key questions that CFIUS assesses
Research firm Rhodium Group said in a report that China’s rise to the top of the CFIUS rankings primarily resulted from the rising number of mainland acquisitions in the US.