Why a Chinese Buyout of Micron Is Not Likely To Succeed 35
Lucas123 writes: A reported $23 billion offer to purchase U.S.-based Micron, one of the largest DRAM and memory makers in the world, by a Chinese state-owned chip maker isn't likely to succeed for several reasons, not the least of which is that the U.S. government is unlikely to approve it and Micron has no reason to sell. Tsinghua Unigroup, a somewhat enigmatic company that is funded by Tsinghua University in China, offered $21 a share for Micron, which is a 19.3% premium over Micron's closing price on Monday. Micron's market cap is currently $20.7 billion. Micron has denied it received an offer from Tsinghua, but a Wall Street Journal report claimed the offer was real.
Industry analysts, however, believe Tsinghua may have used the WSJ as a trial balloon for an offer. Analysts also say rumors of a deal for Micron have been floating around for more than a month. Still, the possibility of a deal surprised some in the industry who expected China to organically grow its own DRAM and memory businesses. By acquiring Micron, however, China would instantly become a big player in what is a robust market. Fang Zhang, an IHS memory analyst, said Micron will not likely accept a buyout offer because the company has been performing well and expects to continue to do so. Additionally, the U.S. government considers chip technology vital to national security, so approval of the deal would at the very least take months if not more than a year during a time when the Chinese economy is at risk of collapse.
Industry analysts, however, believe Tsinghua may have used the WSJ as a trial balloon for an offer. Analysts also say rumors of a deal for Micron have been floating around for more than a month. Still, the possibility of a deal surprised some in the industry who expected China to organically grow its own DRAM and memory businesses. By acquiring Micron, however, China would instantly become a big player in what is a robust market. Fang Zhang, an IHS memory analyst, said Micron will not likely accept a buyout offer because the company has been performing well and expects to continue to do so. Additionally, the U.S. government considers chip technology vital to national security, so approval of the deal would at the very least take months if not more than a year during a time when the Chinese economy is at risk of collapse.
National Security (Score:3)
Additionally, the U.S. government considers chip technology vital to national security,
Potato chips, that is.
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Hey, potatoes are big business in Idaho. Do you like french fries? Do ya? Hate for you to show up at a burger joint and no french fries? And don't get me started on tater tots!
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potatoes are big business in Idaho
I know. I always wondered if Micron was just a misunderstanding. When J.R. Simplot told the board of directors that they should go into the chip business, did they get it wrong?
"No, YOU tell him we're not making potato chips! I'm not getting fired over this."
Hmm tough choice (Score:1)
Owned by a country that wants to sell you cheap goods and only cares about controlling people in their own country or owned by a country that want's to know everything about everyone so they can control them and have access to everything you say and do. Oh and they'll also force democracy on you
Re:Hmm tough choice (Score:4, Interesting)
You live in a fantasy world, if you believe the Chinese wouldn't want access to everything. The actions of these superpowers are not limited by morale, only capabilities. And the Chinese capabilities are steadily growing.
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That's not to say that the F-35 doesn't have it's problems, but the J-31 isn't even the same league as the F-22.
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US govt considers chip tech vital to natl security (Score:3)
But didn't that boat sail 25 years ago?
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But didn't that boat sail 25 years ago?
Most of the most fancy-pants fabs are here in the US of A. You never hear about them because, unlike other industries, they spend enough money to prevent horrible industrial accidents.
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Most of the most fancy-pants fabs are here in the US of A.
True, but those fancy-pants fabs are not owned by Micron. Micron's fabs use older tech. Also, most of Micron's fabs are in Asia, not America.
Citation: List of fabs [wikipedia.org]
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True, but those fancy-pants fabs are not owned by Micron. Micron's fabs use older tech. Also, most of Micron's fabs are in Asia, not America.
It's hard to know how specific someone is being, if they aren't specific. Er, wait. Anyway, sure, for Micron, it's sailed.
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It becomes very expensive just to keep the paperwork, legal teams, export controls around US R and D teams.
Sooner or later a generational hardware change will see other nations like Canada, Israel, Australia, South Korea, France, Taiwan just offer the same expert export focused campus deals. Top experts, a much more understanding local tax system a
Did the stock price jump? (Score:1)
There ya go...
Solar panels will show us what likely will be done (Score:1)
A few years ago, when Solyndra and other companies were in business, they got inundated by hacking attempts of varying degrees of success.
Six months later, China was exporting panels for less than the costs of rare earths, trashing the market completely.
I wouldn't be surprised to see history repeat itself, Micron is likely going to be the target of precise attacks (be it network wise, or even "boots on the ground"), and a no-name competitor will sprout up offering the same products Micron does for less than
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Micron is likely going to be the target of precise attacks (be it network wise, or even "boots on the ground"), and a no-name competitor will sprout up offering the same products Micron does for less than it costs to normally produce them.
Micron already has the problem of someone offering the same products for less than it costs to normally produce them. It's coming from a no-name competitor called Samsung. It's because Samsung is already on a more advanced production node than Micron (smaller chips, similar cost per wafer, hard to compete)...
The DRAM game is mostly about getting yields on advanced production nodes (e.g., 30nm vs 20nm) and financial games to fully depreciate/amortize the cost of constructing multi-billion dollar fabs. Cu
"the Chinese economy is at risk of collapse" (Score:3)
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If it's anything like their buildings... [google.com]
A university has $23 billion USD? (Score:2)
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More than likely they are a vehicle to allow the Chinese government to spend the $23bn without it looking like the Chinese government is the one spending the $23bn.
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What else would you expect the Government of China to do with all those worthless US dollars the US government owes. It makes sense to send that US dollar debt back to the US to buy up those US companies that contract to Chinese companies to make products the US companies sell and pretend are their own, well, at least the ones that still do manufacture in the US. Really rather dumb to sit on an ever growing pile of US dollar debt.
By the same token, any country does not produce and control it's own techno