Micron May Be Most Likely Target For China's Tsinghua

On Monday morning, Tsinghua Unigroup’s Chairman Zhao Weiguo told Reuters that it was engaged in talks with a semiconductor company in the United States and that a deal could be reached before the end of the month.

Following publication, Macquarie analysts weighed in on the issue, noting that in light of China’s most recent moves in the memory space, they think Micron is “the most likely target for Tsinghua.”

Related Link: This Analyst Isn't Flinching At Micron

The Talks

Tsinghua’s Zhao explicated that a majority stake was not likely because of regulatory concerns. However, the research firm pointed out that “its recent 15 percent equity stake in Western Digital Corp (NASDAQ: WDC) at a 33 percent premium provides a template for a potential deal.”

As stated in previous reports, the experts said they “believe that ‘building’ and ‘buying’ semiconductor assets is a difficult proposition for China, and expect more ‘investing’ and ‘coercion’ type deals going forward.”

The report then went into the analysis of the impact of Zhao’s declarations.

Zhao's Impact

For starters, they highlighted that China is very interested in semiconductors, and particularly in memory, as it intends to become a relevant player in the global market. Thus, they believe “memory is a natural target, and note that much of China’s recent moves in semiconductors have involved memory (ISSI, MU, 3D NAND facilities for INTC and Samsung).”

They also pointed out that, being the fourth largest semiconductor company in the world, Micron makes a good acquisition.

The report continued to assure that China’s playbook “involves investing/coercing in semi market,” and that, if Tsinghua took a 15 percent stake in Micron, the company would receive about $3.3 billion.

Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.

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