Obscure Chinese firm Wingtech Technology Co will buy Dutch chip maker Nexperia for US$3.6 billion

  • Wingtech Technology Co is acquiring 75.86 per cent of Nexperia, which NXP Semiconductors sold to a consortium of Chinese investors in 2016
PUBLISHED : Friday, 26 October, 2018, 3:32pm
UPDATED : Friday, 26 October, 2018, 3:39pm

A little-known Chinese company that styles itself as one of the world’s biggest smartphone manufacturers is acquiring Dutch chip maker Nexperia for 25.2 billion yuan (US$3.6 billion), a mega-deal that needs US approval at a time American concerns about the world’s second largest economy run high.

Wingtech Technology Co is acquiring effectively 75.86 per cent of Nexperia, which NXP Semiconductors sold to a consortium of Chinese investors in 2016. It consolidates control of the Dutch chip maker under a company that assembles devices for smartphone brands from Huawei Technologies to Lenovo Group and Xiaomi Corp.

China has been trying to free itself from a reliance on foreign technology, investing billions of dollars in the semiconductors considered vital to national security.

The deal for Nexperia, however, requires approval from the Committee on Foreign Investment in the United States, an inter-agency body that has already torpedoed a number of recent high-profile deals.

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Concerns about China’s acquisition of technology have grown since US President Donald Trump accused the country of unfairly getting its hands on valuable intellectual property.

Wingtech itself is not a name that travels beyond hi-tech industry circles. It was founded in 2006 by Zhang Xuezheng, a former engineer-turned-executive for ZTE Corp – the telecommunications equipment maker that incurred US ire this year for violating export sanctions.

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Like iPhone-assembler Hon Hai Precision Industry Co, Wingtech makes devices on behalf of other brands, such as Xiaomi’s low-end Redmi. But it is now trying to build up its semiconductor capabilities including in chip design, manufacturing and packaging, and has said it is growing its research and development arms in Shenzhen, Xi’an and Shanghai.

Wingtech has not fully outlined how it is going to bankroll the acquisition of Nexperia, which supplies automotive and industrial clients with components from diodes to logic packages.

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The Chinese company said in a Thursday filing that it will raise 4.63 billion yuan by issuing up to 127.45 million shares, which is still a fraction of the intended outlay.

Its shares have been suspended from trade since April, when it disclosed an outline of the deal and its market value stood at 19.4 billion yuan. The company reported about 16.8 billion yuan in revenue last year.