Caixin
Dec 22, 2016 04:49 PM
BUSINESS & TECH

Unigroup Pays 19.7 Billion Yuan for Control of Hubei Chipmaker

(Beijing) — Microchip maker Tsinghua Unigroup will buy a controlling stake of a domestic rival for 19.7 billion yuan ($2.8 billion), as it tries to build a semiconductor empire via domestic acquisitions after being rebuffed in several high-profile global attempts.

Unigroup will use one of its listed units, Unigroup Guoxin Co. Ltd., to buy the stake in Yangtze River Storage Technology Co., a chip maker based in central China's Hubei province, Guoxin said in a statement to the Shenzhen Stock Exchange on Thursday.

Under the deal, Guoxin will team up with two partners to set up a holding company whose main asset is Yangtze River Storage. Guoxin will pay 19.7 billion yuan for 51% of the company, it said.

The deal comes amid a broader worldwide consolidation of chip makers, and as Beijing tries to encourage the emergence of some homegrown local giants that can compete globally. China is the world's largest consumer of microchips that power products as diverse as cars and smartphones. Yet despite that position, it imports most of those chips from foreign companies.

"In recent years China has put out a national plan to develop the microchip industry to ease the dependence on imported chips," Guoxin said in a statement. "Under those circumstances, Unigroup has chosen (two partners) to promote consolidation and development of a domestic chip-making industry."

Affiliated with Tsinghua University, China's leading sciences school, Unigroup is one of the most aggressive of a handful of national companies trying to consolidate the domestic industry and build a chip-making giant that can take on global leaders like Qualcomm Inc. and Samsung.

It has also tried to make several major global acquisitions, including attempts to buy some or all of U.S. memory giants Micron Technology Inc. and Western Digital Corp., as well as several smaller Taiwan companies. But the U.S. deals fell apart due to political opposition, while the Taiwan deals are also in jeopardy due to similar sensitivities.

Contact reporter Yang Ge (geyang@caixin.com)

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