[photopress:IT_semiconductor_manufacturing.jpg,full,alignright]There is a strong rumor that China’s biggest chipmaker, Semiconductor Manufacturing International, is in advanced talks to acquire Japanese tech giant NEC’s China venture to boost scale in the country’s competitive chip market.
The deal would create a stronger chip industry leader as it may eventually boost SMIC’s monthly production capacity by 40%.
Warren Lau, analyst at Macquarie Research said, ‘I can see the benefits of such a merger.’
A perceptive comment for China’s demand for chips, although fluctuating, is constantly on the rise and has a lot of growth ahead.
The race to produce chips for the Chinese market is in a sense between Taiwanese and Chinese companies. At the moment China has about 30% of the market. But also accounts for over one-fifth of global demand for microchips.
Beijing is also keen to nurture firms to become national champions in its technology sector and has done this by offering tax breaks and investment.
It is said that senior executives at SMIC, which has posted losses for most of the past two years, have been in talks with top officials of Hua Hong NEC for a possible merger for months. Do not be misled by those losses. SMIC has some of the most sophisticated fabrications facilities — fabs — in the world and, equally important, a well-trained and loyal staff who are given excellent perks to stay with the company.
Nobody is making any formal comment and calls from the reptiles of the press remain unanswered so there is probably a strong basis for the story.
Analysts said the potential acquisition could boost SMIC’s monthly production capacity by around 40%.
Domestic market demand for chip products is expected to rise rapidly over the next few years, partly because sales of audiovisual and home appliances are likely to increase in China.
Source: Reuters