Semiconductor companies that China can't buy
In recent years, China's semiconductor industry has developed rapidly, and many companies have emerged on the international list, and cross-border mergers and acquisitions have undoubtedly played a very important role in this process.
In 2016, JTE acquired Singapore Jinke Xingpeng, the world's fourth largest sealed test company, to become the world's third largest sealed test manufacturer. Tongfu Micro also acquired AMD's two closed test plants in Suzhou and Penang, Malaysia, in recent years, driven by AMD as a major customer, the closed test business has been prosperous.
In April 2018, Wentech acquired ASIC Semiconductor, a global leader in upstream core components such as logic chips, discrete devices and power semiconductors.
In July 2019, Weil acquired the United States Howe Technology, known as the world's third largest CMOS image sensor company.
In November 2019, Beijing Junzheng acquired ISSI, an American memory chip design company, to become a domestic leader in automotive memory chips. Omdia data show that in 2022, Beijing Junzheng SRAM, DRAM, Nor Flash product revenue in the global market ranked second, seventh, sixth, in the forefront of the international market.
In 2023, tin microcore completed the acquisition of the world's second largest mobile base station radio frequency semiconductor company Ampleon (referred to as "Ampleon"), the transaction amount of more than 10 billion yuan, after the completion of the acquisition, tin microcore will directly jump to the world's second largest mobile base station radio frequency device supplier.
There is no doubt that mergers and acquisitions are a very important means for semiconductor companies to grow, regardless of national boundaries. For some semiconductor giants at home and abroad, mergers and acquisitions are an important stepping stone on their way to development and growth. In 2023, mergers and acquisitions on the international stage show a hot trend, such as Japan's acquisition of ArF photoresist leader JSR, Infineon's acquisition of GaN System, Qualcomm's acquisition of Israel's Autotalks, Renesas Electronics's acquisition of Panthronics, etc., but there are few Chinese capital or Chinese enterprises. To make matters worse, some deals have foundered. Today, due to a variety of factors, it has become more difficult for domestic semiconductor companies to acquire overseas companies.
Semiconductor companies that China can't buy
In recent years, there have been a series of failed acquisitions in the domestic semiconductor field. In February 2016, for example, Fairchild Semiconductor rejected an offer from a Chinese acquirer. In November of the same year, the acquisition of Aixtron, the leading German LED semiconductor equipment MOCVD, initiated by Fujian Grand Chip Fund, was also interfered with and blocked by the US government. In September 2017, the United States blocked the acquisition of US chipmaker Lattice by China-backed private equity Fund Canyon Bridge Fund Partners.
With the growing tension between China and the United States, the United States is increasingly determined to suppress China's semiconductor development. Scrutiny of Chinese investments in the United States will be stricter, a trend that makes it more difficult for China to conduct cross-border acquisitions and cooperation in the semiconductor field.
In December 2021, Sai Microelectronics announced that it intends to acquire the assets related to the automotive chip manufacturing production line of Germany Elmos in Dortmund, North Rhine-Westphalia, Germany (referred to as "Germany FAB5") for 84.5 million euros (about 600 million yuan). The Elmos automotive chip manufacturing line to be acquired was built in 2009 and is in good operating condition, referred to as "German FAB5".
The announcement pointed out that through the acquisition of Elmos' automotive chip manufacturing line related assets, the company will further expand the business scope of the core sensor and chip process manufacturing to the field of automotive electronics, while rapidly increasing the overseas production capacity that can be compatible with MEMS and CMOS chip integration process manufacturing. It is conducive to the company to actively grasp the development opportunities of the global semiconductor characteristic process manufacturing industry, especially the rapid growth of global automotive chip and MEMS chip manufacturing demand, so as to promote the further development of the company's business, improve the company's comprehensive competitive strength in the world, and finally implement the long-term development strategy of the company after transformation, that is, focus on the main business. Strive to become a well-known semiconductor technology enterprise group based on local and international development.
But this plan of Sai Microelectronics can not be put to work. In November 2022, the German federal government banned Sweden's Silex from acquiring Germany's Elmos automotive chip production line on the grounds that it "determined that it threatened the order and security of Germany." Sai Microelectronics pointed out in the announcement that it deeply regrets this final result, and will continue to be optimistic about and attach importance to the automotive chip industry and related business layout.
Elmos, which Cymicro failed to buy, is about to fall to Littelfuse, an American company. On June 28, 2023, Elmos announced that it had agreed to sell the fab, which has a highly skilled technical team of approximately 225 employees, for a net purchase price of approximately €93 million. In addition, Elmos and Littelfuse have agreed to enter into a clear multi-year capacity sharing arrangement, with an initial term lasting until 2029, for Elmo to purchase a certain number of wafers produced by the fab. The closing of the transaction is expected to be effective on December 31, 2024, and is subject to certain closing conditions and regulatory approvals. With the acquisition of the Dortmund Fab, Littelfuse has enhanced its capabilities in power semiconductors.
On May 23, 2023, Candence, one of the three big EDA companies, acquired the British EDA company Pulsic, and as early as a year ago, Super Orange HK, an investment institution in Hong Kong, also intended to buy. Pulsic is an EDA company founded in 2000, focusing on providing solutions for the design of chips on advanced custom nodes, with many years of accumulation in areas such as layout and cabling, and revenue of 3.8 million pounds in 2022. But the British government blocked the Chinese consortium's takeover of Pulsic on national security grounds. In response, the Chinese embassy in London said: "Any abuse of national security review will only harm the UK's investment environment and long-term interests."
According to Hong Kong public documents and Chinese enterprise data, Super Orange HK is behind a domestic EDA software enterprise holding, as we all know, EDA industry is a highly representative industry of acquisition, EDA giants are all through a large number of acquisitions to enhance their technical capabilities, expand market share and acquire new customers and product lines. In recent years, China's EDA enterprises have begun to cut through the point tool, and are entering the development and expansion stage of gradually completing the product line. Such a move by the British government has also curbed the growth of domestic EDA companies.
Not only is it difficult to acquire overseas semiconductor companies, but also Newport Wafer Fab, a duck that has reached its mouth, is facing uncertainties.
The context of the matter is that in July 2021, Wentai Technology's Ansy Semiconductor (located in the Netherlands) has completed the acquisition of Newport Wafer Fab, the largest compound wafer factory in the UK, with a transaction value of 63 million pounds (about $75 million). Prior to this, ANSI Semiconductor initially owned 14% of Newport Wafer Wafer, and after the acquisition, owned 100% of it. Before the acquisition, the fab was already struggling to sustain itself, losing £13 million in 2020.
However, on November 16, 2022, the British government issued a statement that after a detailed assessment of national security, it blocked the acquisition of the Wafer Fab by ANSy Semiconductor, and required ANSy Semiconductor to sell at least 86% of the equity of Newport Wafer Fab within a specified period and in accordance with the specified process, that is, to restore the shareholding share before the acquisition. For the British government's decision, at that time the factory's 582 employees were extremely opposed, since the acquisition of ANSI Semiconductor, Newport Wafer Fab is still losing money, a loss of about $15.1 million, a large part of the loss is borne by ANSI Semiconductor. The company said a sale of the fab could lead to the closure of the facility.
Although the company has hired US and UK law firms to fight the UK government's ruling revoking its acquisition of Newport Wafer Fab, it does not feel too optimistic about the matter. If the fab is forced to "spit out", it will likely become the subject of investment by semiconductor manufacturers in other countries, according to The Daily Telegraph, chip manufacturers ST and GF have expressed interest in buying the fab.
Foreign subsidiaries are difficult to control
However, even if the acquisition, it will face a lot of uncertainties. As the United States further suppressed Chinese semiconductor companies by increasing export control measures, it not only lacked fixed standards, but also had no bottom line, and what was worse, the position of some other countries also began to switch sides. For some subsidiaries of Chinese companies that have acquired overseas semiconductor companies through mergers and acquisitions, they face some obstacles in terms of technology exchange and collaborative development, which has a huge impact on the domestic semiconductor industry.
First of all, the overseas subsidiary technology exports are at risk, such as in October 2021, the Swedish government rejected the application of Silex, a subsidiary of Sai Microelectronics located in Sweden, to Sai Microelectronics Beijing production line (FAB3) technology exports, although Sai Microelectronics has solemnly declared that the company has been isolated from the original navigation and avionics business since the semiconductor business. There are no military purposes involved, but the Swedish government has taken the decision to ban exports.
This move also has an adverse impact on the medium - and long-term development of FAB3 in Beijing. Sai Microelectronics pointed out in the announcement that the Silex Beijing 8-inch MEMS production line needs to continue to independently explore the relevant production know-how, and it may take more time and cost to achieve process maturity; The expansion of the MEMS foundry wafer category will continue to be self-reliant and cannot be accelerated by technical support from Silex in Sweden; For Sweden's Silex's existing mainland Chinese customers, the planned transfer of production to Silex Beijing may also be slowed.
Moreover, overseas subsidiaries are not entitled to fair chip subsidies. Around April 2023, foreign media reported that Germany will Wentai Technology's Anshi Semiconductor removed from the German government's grant list, Germany was originally in December 2021, Anshi Semiconductor included in the [European Common Interest important program, IPCEI] grant list, to assist its research and development of energy-saving chips. According to German officials, "in order to stem the outflow of technology and curb China's influence in chips," Germany plans to remove ANSI from the list of government subsidies.
In summary, it can be seen that whether it is the direct intervention of the US government or the pressure of censorship, if the current situation continues to develop, the road of overseas mergers and acquisitions of domestic semiconductor companies to find high-quality targets overseas will be more difficult in the future, and their review of Chinese investment will be stricter. Although domestic semiconductor companies may face some challenges and difficulties, it does not mean that there is no opportunity to make overseas acquisitions. The specifics will vary from business to business and may change over time. Changes in factors such as government support, technological breakthroughs, financial support and international cooperation may provide more acquisition opportunities for domestic semiconductor companies.
In this context, the merger and integration between domestic enterprises will become a trend, which is also a favorable choice for the development of domestic semiconductor companies. For example, recently, Jiangpolong acquired Force Technology Suzhou Company, new memory chip seal test business. In the field of silicon wafers, Zhonghuan, TCL's Central subsidiary, took the lead in acquiring Xinxin Semiconductor. In the field of power chips, Jingfeng Mingyuan acquired Nanjing Ling Ouchuang Core Electronics; In the field of EDA software, EDA start-up company Sunguan Core equipment acquired core Cloud Microelectronics, Huada Jiutian Gold acquired core Da Technology, and Core Huazhang integrated core technologies of Kuenyao Electronics. These mergers and acquisitions will promote the integration and optimization of domestic semiconductor resources to achieve scale effects and synergies. In the future, through the efforts of technological innovation, personnel training, industrial ecosystem construction, policy support and international cooperation, domestic semiconductors will usher in a brighter future.
In 2016, JTE acquired Singapore Jinke Xingpeng, the world's fourth largest sealed test company, to become the world's third largest sealed test manufacturer. Tongfu Micro also acquired AMD's two closed test plants in Suzhou and Penang, Malaysia, in recent years, driven by AMD as a major customer, the closed test business has been prosperous.
In April 2018, Wentech acquired ASIC Semiconductor, a global leader in upstream core components such as logic chips, discrete devices and power semiconductors.
In July 2019, Weil acquired the United States Howe Technology, known as the world's third largest CMOS image sensor company.
In November 2019, Beijing Junzheng acquired ISSI, an American memory chip design company, to become a domestic leader in automotive memory chips. Omdia data show that in 2022, Beijing Junzheng SRAM, DRAM, Nor Flash product revenue in the global market ranked second, seventh, sixth, in the forefront of the international market.
In 2023, tin microcore completed the acquisition of the world's second largest mobile base station radio frequency semiconductor company Ampleon (referred to as "Ampleon"), the transaction amount of more than 10 billion yuan, after the completion of the acquisition, tin microcore will directly jump to the world's second largest mobile base station radio frequency device supplier.
There is no doubt that mergers and acquisitions are a very important means for semiconductor companies to grow, regardless of national boundaries. For some semiconductor giants at home and abroad, mergers and acquisitions are an important stepping stone on their way to development and growth. In 2023, mergers and acquisitions on the international stage show a hot trend, such as Japan's acquisition of ArF photoresist leader JSR, Infineon's acquisition of GaN System, Qualcomm's acquisition of Israel's Autotalks, Renesas Electronics's acquisition of Panthronics, etc., but there are few Chinese capital or Chinese enterprises. To make matters worse, some deals have foundered. Today, due to a variety of factors, it has become more difficult for domestic semiconductor companies to acquire overseas companies.
Semiconductor companies that China can't buy
In recent years, there have been a series of failed acquisitions in the domestic semiconductor field. In February 2016, for example, Fairchild Semiconductor rejected an offer from a Chinese acquirer. In November of the same year, the acquisition of Aixtron, the leading German LED semiconductor equipment MOCVD, initiated by Fujian Grand Chip Fund, was also interfered with and blocked by the US government. In September 2017, the United States blocked the acquisition of US chipmaker Lattice by China-backed private equity Fund Canyon Bridge Fund Partners.
With the growing tension between China and the United States, the United States is increasingly determined to suppress China's semiconductor development. Scrutiny of Chinese investments in the United States will be stricter, a trend that makes it more difficult for China to conduct cross-border acquisitions and cooperation in the semiconductor field.
In December 2021, Sai Microelectronics announced that it intends to acquire the assets related to the automotive chip manufacturing production line of Germany Elmos in Dortmund, North Rhine-Westphalia, Germany (referred to as "Germany FAB5") for 84.5 million euros (about 600 million yuan). The Elmos automotive chip manufacturing line to be acquired was built in 2009 and is in good operating condition, referred to as "German FAB5".
The announcement pointed out that through the acquisition of Elmos' automotive chip manufacturing line related assets, the company will further expand the business scope of the core sensor and chip process manufacturing to the field of automotive electronics, while rapidly increasing the overseas production capacity that can be compatible with MEMS and CMOS chip integration process manufacturing. It is conducive to the company to actively grasp the development opportunities of the global semiconductor characteristic process manufacturing industry, especially the rapid growth of global automotive chip and MEMS chip manufacturing demand, so as to promote the further development of the company's business, improve the company's comprehensive competitive strength in the world, and finally implement the long-term development strategy of the company after transformation, that is, focus on the main business. Strive to become a well-known semiconductor technology enterprise group based on local and international development.
But this plan of Sai Microelectronics can not be put to work. In November 2022, the German federal government banned Sweden's Silex from acquiring Germany's Elmos automotive chip production line on the grounds that it "determined that it threatened the order and security of Germany." Sai Microelectronics pointed out in the announcement that it deeply regrets this final result, and will continue to be optimistic about and attach importance to the automotive chip industry and related business layout.
Elmos, which Cymicro failed to buy, is about to fall to Littelfuse, an American company. On June 28, 2023, Elmos announced that it had agreed to sell the fab, which has a highly skilled technical team of approximately 225 employees, for a net purchase price of approximately €93 million. In addition, Elmos and Littelfuse have agreed to enter into a clear multi-year capacity sharing arrangement, with an initial term lasting until 2029, for Elmo to purchase a certain number of wafers produced by the fab. The closing of the transaction is expected to be effective on December 31, 2024, and is subject to certain closing conditions and regulatory approvals. With the acquisition of the Dortmund Fab, Littelfuse has enhanced its capabilities in power semiconductors.
On May 23, 2023, Candence, one of the three big EDA companies, acquired the British EDA company Pulsic, and as early as a year ago, Super Orange HK, an investment institution in Hong Kong, also intended to buy. Pulsic is an EDA company founded in 2000, focusing on providing solutions for the design of chips on advanced custom nodes, with many years of accumulation in areas such as layout and cabling, and revenue of 3.8 million pounds in 2022. But the British government blocked the Chinese consortium's takeover of Pulsic on national security grounds. In response, the Chinese embassy in London said: "Any abuse of national security review will only harm the UK's investment environment and long-term interests."
According to Hong Kong public documents and Chinese enterprise data, Super Orange HK is behind a domestic EDA software enterprise holding, as we all know, EDA industry is a highly representative industry of acquisition, EDA giants are all through a large number of acquisitions to enhance their technical capabilities, expand market share and acquire new customers and product lines. In recent years, China's EDA enterprises have begun to cut through the point tool, and are entering the development and expansion stage of gradually completing the product line. Such a move by the British government has also curbed the growth of domestic EDA companies.
Not only is it difficult to acquire overseas semiconductor companies, but also Newport Wafer Fab, a duck that has reached its mouth, is facing uncertainties.
The context of the matter is that in July 2021, Wentai Technology's Ansy Semiconductor (located in the Netherlands) has completed the acquisition of Newport Wafer Fab, the largest compound wafer factory in the UK, with a transaction value of 63 million pounds (about $75 million). Prior to this, ANSI Semiconductor initially owned 14% of Newport Wafer Wafer, and after the acquisition, owned 100% of it. Before the acquisition, the fab was already struggling to sustain itself, losing £13 million in 2020.
However, on November 16, 2022, the British government issued a statement that after a detailed assessment of national security, it blocked the acquisition of the Wafer Fab by ANSy Semiconductor, and required ANSy Semiconductor to sell at least 86% of the equity of Newport Wafer Fab within a specified period and in accordance with the specified process, that is, to restore the shareholding share before the acquisition. For the British government's decision, at that time the factory's 582 employees were extremely opposed, since the acquisition of ANSI Semiconductor, Newport Wafer Fab is still losing money, a loss of about $15.1 million, a large part of the loss is borne by ANSI Semiconductor. The company said a sale of the fab could lead to the closure of the facility.
Although the company has hired US and UK law firms to fight the UK government's ruling revoking its acquisition of Newport Wafer Fab, it does not feel too optimistic about the matter. If the fab is forced to "spit out", it will likely become the subject of investment by semiconductor manufacturers in other countries, according to The Daily Telegraph, chip manufacturers ST and GF have expressed interest in buying the fab.
Foreign subsidiaries are difficult to control
However, even if the acquisition, it will face a lot of uncertainties. As the United States further suppressed Chinese semiconductor companies by increasing export control measures, it not only lacked fixed standards, but also had no bottom line, and what was worse, the position of some other countries also began to switch sides. For some subsidiaries of Chinese companies that have acquired overseas semiconductor companies through mergers and acquisitions, they face some obstacles in terms of technology exchange and collaborative development, which has a huge impact on the domestic semiconductor industry.
First of all, the overseas subsidiary technology exports are at risk, such as in October 2021, the Swedish government rejected the application of Silex, a subsidiary of Sai Microelectronics located in Sweden, to Sai Microelectronics Beijing production line (FAB3) technology exports, although Sai Microelectronics has solemnly declared that the company has been isolated from the original navigation and avionics business since the semiconductor business. There are no military purposes involved, but the Swedish government has taken the decision to ban exports.
This move also has an adverse impact on the medium - and long-term development of FAB3 in Beijing. Sai Microelectronics pointed out in the announcement that the Silex Beijing 8-inch MEMS production line needs to continue to independently explore the relevant production know-how, and it may take more time and cost to achieve process maturity; The expansion of the MEMS foundry wafer category will continue to be self-reliant and cannot be accelerated by technical support from Silex in Sweden; For Sweden's Silex's existing mainland Chinese customers, the planned transfer of production to Silex Beijing may also be slowed.
Moreover, overseas subsidiaries are not entitled to fair chip subsidies. Around April 2023, foreign media reported that Germany will Wentai Technology's Anshi Semiconductor removed from the German government's grant list, Germany was originally in December 2021, Anshi Semiconductor included in the [European Common Interest important program, IPCEI] grant list, to assist its research and development of energy-saving chips. According to German officials, "in order to stem the outflow of technology and curb China's influence in chips," Germany plans to remove ANSI from the list of government subsidies.
In summary, it can be seen that whether it is the direct intervention of the US government or the pressure of censorship, if the current situation continues to develop, the road of overseas mergers and acquisitions of domestic semiconductor companies to find high-quality targets overseas will be more difficult in the future, and their review of Chinese investment will be stricter. Although domestic semiconductor companies may face some challenges and difficulties, it does not mean that there is no opportunity to make overseas acquisitions. The specifics will vary from business to business and may change over time. Changes in factors such as government support, technological breakthroughs, financial support and international cooperation may provide more acquisition opportunities for domestic semiconductor companies.
In this context, the merger and integration between domestic enterprises will become a trend, which is also a favorable choice for the development of domestic semiconductor companies. For example, recently, Jiangpolong acquired Force Technology Suzhou Company, new memory chip seal test business. In the field of silicon wafers, Zhonghuan, TCL's Central subsidiary, took the lead in acquiring Xinxin Semiconductor. In the field of power chips, Jingfeng Mingyuan acquired Nanjing Ling Ouchuang Core Electronics; In the field of EDA software, EDA start-up company Sunguan Core equipment acquired core Cloud Microelectronics, Huada Jiutian Gold acquired core Da Technology, and Core Huazhang integrated core technologies of Kuenyao Electronics. These mergers and acquisitions will promote the integration and optimization of domestic semiconductor resources to achieve scale effects and synergies. In the future, through the efforts of technological innovation, personnel training, industrial ecosystem construction, policy support and international cooperation, domestic semiconductors will usher in a brighter future.
