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Why a Chinese Buyout of Micron Is Not Likely To Succeed
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.
Additionally, the U.S. government considers chip technology vital to national security,
Potato chips, that is.
Have gnu, will travel.
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
by TheSpoom (715771) Uncaring Linux user here. I have nothing to add to this but please continue. *munches popcorn*
But didn't that boat sail 25 years ago?
"I don't know, therefore Aliens" Wafflebox1
There ya go...
“He’s not deformed, he’s just drunk!”
Your smiley man sure does have a long nose!
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 it costs to normally produce them.
Because the board has already said 'uh sure if you offer 35'. Basically double.
Everything is for sale.
Sort of like the old joke
'Would you have sex with me for a million dollars'
'Yes I would!'
'How about 10 bucks'
'What kind of woman do you think I am?'
'We have already established that we are just negotiating the price now'
http://investors.micron.com/releasedetail.cfm?releaseid=807900
This tech might be interesting to Tshingua University and may be an additional reason for buying Micron and not another DRAM co.
**citation needed...
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.
"You're right," Fisheye says. "I should have set it on 'whip' or 'chop.'"
I don't want my RAM dialling home to Beijing!
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
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.
"You're right," Fisheye says. "I should have set it on 'whip' or 'chop.'"
Six months later, China was exporting panels for less than the costs of rare earths, trashing the market completely.
You are an idiot. The sale of things below the cost of the rare earth elements was done because China was propping up the rare earth market.
It isn't dumping if you make a profit. And the "below cost" panels were profitable. So you don't know what "dumping" is, why china sold panels so cheaply, and probably don't even know what a "rare earth" is.
Really? How is a university planning to fund a $23 billion purchase? Are they going to leverage themselves into an insanity level? Are they an extremely rich university? Something doesn't add up. Maybe they are just a shady front for a shady investment group?
Just because I can hook a shark from a boat, I do no offer to wrestle it in the water.
Micron's main R&D and significant amount of manufacturing is done in the US, in Idaho and Virginia. They also have a large joint venture manufacturing fab with Intel in Utah.
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. Currently on SK Hynix, Samsung and Micron are real players in this game (they have 90% of the market) and Micron is the smallest of the 3 (although to be fair, it's probably the only that could theoretically be purchased by a Chinese company).
If Tsinghua wanted to "attack" someone for memory technology, they would probably have better luck attacking Hynix as they already have a fab in Wuxi (china).
AC it depends on how much the US gov screams globally about dumping product, national security and keeping top quality local jobs in the USA again this decade.
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 and no questions about: national security, export production lines, where the final product is made.
Production can shift to any nation with low cost workers and design can spread to nations that are more understanding to a multinationals needs and trending global sales.
Most nations have fully understood how Japan was treaded in the 1980's and 1990's over computer related design and exports.
Domestic spying is now "Benign Information Gathering"