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What's stopping China from investing in MediaTek?

Posted: 04 Nov 2015 ?? ?Print Version ?Bookmark and Share

Keywords:investment? semiconductor industry? mergers? IC design?

Tsinghua Unigroup, China's investment conglomerate, expressed interest in MediaTek and said that Taiwan's law preventing Chinese companies from investing in Taiwanese companies should be relaxed, according to reports.

Tsinghua Unigroup is one of the tools being used by China to build up its position in the semiconductor industry by way of a series of mergers and acquisitions. MediaTek is a Taiwan-based fabless semiconductor company that provides system-on-chip solutions for wireless communications, HDTV, DVD and Blu-ray.

Zhao Weiguo, chair of Tsinghua Unigroup, told Taiwan's media that if Taiwan's government lifts its ban on Chinese investment in the IC sector, then Tsinghua Unigroup would be willing to discuss a merger deal between Spreadtrum Communications, RDA Microelectronics and MediaTek.

Zhao is on a visit to Taiwan and reportedly said he had considered meeting with MediaTek chair Ming-Kai Tsia but had not because as Taiwan law stands there is no scope for discussion.

MediaTek responded by way of a filing with the Taiwan Stock Exchange that reportedly states that the company will adopt an open attitude and is willing to join hands with Chinese companies, as far as government policies allow.

The Taiwanese government, for its part, will assess the possibility of lifting its ban on investments by China-based firms in the local IC design industry, according to a DigiTimes report that quoted officials from Taiwan's Ministry of Economic Affairs (MOEA) and Financial Supervisory Commission.

Economic minister John Deng said in the report that the MOEA will see if changes in the law are needed to meet the demands of companies. However, he stressed that any changes to the laws will essentially have to benefit Taiwan.

Only days before it was announced that Tsinghua Unigroup would invest $600 million to buy a 25-per cent stake in Taiwan-based Powertech Technology, a provider of test and packaging services to the IC industry, but not part of the protected IC design domain (see China to take 25% Stake in Taiwan's Powertech).

Another major play was made by Tsinghua Unigroup in July when it floated the idea of a $23-billion bid for memory chip company Micron Technology. Although the deal was thought unlikely at the time, partly because of U.S. foreign investment concerns, the possibility of the deal lingers.

And in October Tsinghua Unigroup hired Charles Kau, previously head of Taiwan chipmaker Inotera Memories, a joint venture between Micron and Taiwan's Nanya Technology Corp.

- Peter Clarke
??EE Times Europe
??With inputs from Stephen Padilla

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