Will Micron be Purchased by Chinese Company Tsinghua?

Will Micron be Purchased by Chinese Company Tsinghua?

Reports have emerged that Tsinghua Unigroup, a state-owned Chinese firm, is planning to purchase Micron Technology Inc., the largest U.S. maker of memory chips.

At $23 billion it would be by far the largest takeover of an American company by a Chinese one. The barrier that stands between this acquisition is the stiff resistance in Congress, which views America’s semiconductor business as a strategic asset.

Micron thinks it is unlikely that the acquisition will be approved. Micron’s response to Tsinghua’s proposal demonstrates the hurdles the Chinese state-backed investment firm would have to overcome given the enormous dependence of modern weapons on computer chips. The Committee of Foreign Investment in the United States (CFIUS) has the power to stop mergers that might endanger national security. Senator John McCain raised concerns stating, “I am concerned by the potential national security implications of a planned bid by a Chinese state-owned enterprise for Micron Technology, the last major American manufacturer of memory chips.”

Micron’s shares have increased volatility, jumping as much as 13% on Tuesday, July 14th with news of the acquisition. As the deal seems more unlikely stock has begun declining once more, down 6.11% by the end of Monday, July 20.

Micron is the last major U.S. based manufacturer of dynamic random access memory (DRAM) chips, which are used in personal computers. If China was to acquire Micron’s cutting-edge memory manufacturing technology it could make a large impact on China’s up-and-coming chip industry.

If this acquisition were somehow to occur, there would be a massive change in the memory segment of electronic components. Advanced MP Technology’s experienced global procurement team is ready for any changes that the component industry may face and will continue to support our customers in any market fluctuation.