In what could be one of the biggest acquisitions of a US company by a Chinese firm, China’s state owned Tsinghua Unigroup has made an bid to acquire US semiconductor manufacturer Micron Technology for $23 billion.
Some experts in the HPC industry have suggested that this deal may have arisen out of necessity, as several Chinese supercomputing centers were added to the US ‘Entity List’ earlier this year. The DOE’s entity list effectively bans these Chinese supercomputing centers from buying processors from Intel – as reported in Scientific Computing World in April this year.
Whether or not the deal is in fact driven by the US embargo, it reflects China’s ambitions to develop domestic HPC and computing technology. At the International Supercomputing Conference held in Frankfurt in July, professor Yutong lu, director of the system software laboratory, school of computer science, National University of Defense Technology in China highlighted that China is developing its own accelerator called the Matrix2000 GPDSP or the ‘Chinese domestic accelerator’. This new GPU/DSP hybrid will be used in forthcoming upgrades to the Tianhe-2A supercomputer located at the China’s National University of Defense Technology.
The Micron deal would give some much needed IP in areas such as semiconductor technology and memory — two areas where China currently lags behind its US counterparts.
An article in the Nasdaq stock market website quotes Handel Jones, president of the Silicon Valley consultancy International Business Strategies, which highlights this view. Jones said: ‘They have decided that they really have to buy somebody because they can’t deliver the intellectual property themselves.’
The question still remains whether the US would allow such a takeover, given that it has already decided to effectively put sanctions on the development of HPC in China.
If the deal were to proceed it would represent the largest Chinese takeover of a US company. The previous record was set by a Chinese meat processor Shuanghui International Holdings. It made a $7.1 billion takeover of Smithfield Foods in 2013, according to data provider Dealogic.
According to the Nasdaq article, the Tsinghua Unigroup, China’s largest chip design company, offered $21 a share for Micron, a 19.3 per cent premium over its Monday closing price on July 13th.
This potential deal represents another big acquisition of a chip manufacturer in 2015, which has been a year of consolidation within the chip sector. Several other takeover bids have been announced this year including the $37 billion cash and stock deal for Avago Technologies to acquire Broadcom, announced May. Shortly afterward, Intel announced a deal to buy Altera for approximately $16.7 billion in cash.
As the industry fast approaches the hard limits imposed by Moore’s law, it is becoming increasingly difficult for chip manufacturers to achieve the performance increases which have been delivered year-on-year for the past four decades. Chip manufacturers are being forced to innovate new ways to keep up with performance increases and for almost all the major players part of that strategy involves looking across the industry for IP which can be integrated into their existing technology roadmaps.