As Micron is reportedly being eyed to be bought by a China-owned entity, talks about possible global price war have surfaced. (Photo : Reuters)
Tsinghua Unigroup Ltd., state-run and China's biggest chip design firm, is willing to offer a bid worth $23 billion to Idaho-based memory chip maker Micron Technology Inc., according to people familiar with the deal.
Tsinghua's offer translates to paying $21 per share for Micron, a 19.3-percent premium of the firm's Monday morning price, which closed at $17.61.
A spokesman from Micron said that they have not received a buyout offer yet, and has declined to further give comments.
However, any deal involving U.S. and foreign firms will most likely face scrutiny by U.S. officials. One question posed by analysts about the buyout offer is whether it will be reviewed by the Committee on Foreign Investments in the United States (CIFUS).
CIFUS is known for examining deals, determining whether acquisitions or investments pose a security threat. Once the group decides that it is a potential threat, the deal can be blocked.
The move, if pushed through, could be the biggest foreign takover by a firm from the country. The record is currently held by Shuanhui International Holdings Ltd. The Chinese meat processor took over Smithfield Foods Inc. in 2013 for $7.1 billion.
Meanwhile, Tsinghua's bid mirrors the Chinese government's efforts to establish more local semiconductor sources. These are considered crucial to in-demand consumer items such as smartphones.
China is considered relatively weak in making memory chips. Hence, for Silicon Valley consultancy International Business Strategies president Handel Jones, the offer comes at no surprise.
"They have decided that they really have to buy somebody because they can't deliver the intellectual property themselves," Jones remarked.
Tsinghua Unigroup, founded in 1988 by the Chinese elite Tsinghua University, has already built several links with other major U.S. companies.
Meanwhile, Micron, built in 1978, is number two behind Samsung Electronics Co. in the dynamic random access memory market.
