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 The technology conglomerate is prepared to bid $21 per share for
Micron, a 19.3 percent premium to the stock's close on Monday. The
offer could come as early as Wednesday, a person close to Tsinghua
told Reuters, although a Micron spokesman said it had not received
an offer.
A successful bid would consolidate Tsinghua Unigroup's position as a
champion for China's technology development, after it struck deals
and research partnerships with international firms in the
semiconductor industry.
The company is controlled by Tsinghua University in Beijing, which
counts President Xi Jinping among its alumni, and is backed by
China's central government.
China has attached strategic importance to the development of
domestic semiconductor, server and networking equipment industries
amid fears of foreign cyberspying.
But any foreign takeover of Idaho-based Micron - the last major
U.S.-based manufacturer of DRAM chips used in personal computers -
would likely have to pass a review by the Committee on Foreign
Investment in the United States, which looks at the national
security implications of such deals.
Vincent Gu, a Shanghai-based analyst at iSupply, said the chances of
the U.S. government approving the deal would be "next to zero" given
the political hurdles. "It's difficult to purchase the critical
technology. China should stay firmly grounded and persevere with
researching the technology itself," Gu said.
GREAT LEAP
Micron makes both dynamic random access memory (DRAM) chips and NAND
memory chips for storing music, pictures and other data on
smartphones, cameras and other mobile devices.
Acquiring Micron's cutting-edge memory manufacturing technology
would be a major advance for China's modest but improving chip
industry headed by Tsinghua Unigroup.
With roots as a private equity fund, Tsinghua Unigroup transformed
into a serious semiconductor player after it bought Chinese
chipmakers RDA Microelectronics and Spreadtrum in deals totaling
$1.6 billion last year. When Tsinghua Unigroup received a $1.5
billion investment from Intel Corp in October, the two sides pledged
to cooperate on research and further Chinese technology.
The Wall Street Journal first reported early on Tuesday that
Tsinghua Unigroup was prepared to submit a bid, citing people
familiar with the matter.
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CHIP CONSOLIDATION
None of the world's top memory chip manufacturers are based in
China, although South Korea's SK Hynix has a plant in Wuxi and
Samsung Electronics Co Ltd, the global market leader also from South
Korea, last year began full-scale production at a new NAND chip
factory in Xi'an.
Micron has manufacturing plants and a sales office in Taiwan, and
indirectly holds a 20 percent stake in Inotera Memories Inc, a joint
venture with Nanya Technology Corp. If Micron became a Chinese-owned
company, Taiwanese rules would require it to re-submit its
investment application for review.
The memory business in recent years has seen rapid consolidation. In
May, Hewlett-Packard Co sold a controlling 51 percent stake in its
China-based data-networking business to Tsinghua Unigroup for at
least $2.3 billion, forming a partnership designed to create a
Chinese technology powerhouse.
Last year Intel acquired a stake in two mobile chipmakers through
another deal with Tsinghua Unigroup, which owns the companies.
A Micron deal could also face scrutiny from China's National
Development and Reform Commission, which must approve outbound
investments worth more than $2 billion or those in sensitive
industries.
Billionaire hedge fund manager David Einhorn said in an investor
letter on Monday that Micron would be worth more than Netflix Inc <NFLX.O>
within the next few years. Netflix was worth $42.9 billion at
Monday's close.
(Reporting by Sneha Banerjee in Bengaluru, Noel Randewich and Peter
Henderson in San Francisco, and Paul Carsten and Gerry Shih in
Beijing; Writing by John Ruwitch in Shanghai; Editing by Stephen
Coates and Ian Geoghegan)
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