China thinks that people like money...except the Americans

Sep 2, 2015 10:26 GMT  ·  By
GlobalFoundries is the perfect company to buy, until you get to the Americans
   GlobalFoundries is the perfect company to buy, until you get to the Americans

Amid continuous and somewhat tense talks between the U.S. government and the massive, state-owned Chinese Tsinghua Unigroup corporation about a possible Micron acquisition by the Chinese, another major manufacturer, GlobalFoundries, is being eyed by China in hopes of an eventual acquisition.

Apparently, another state-owned Chinese group, the Hua Capital Management, which manages China's National Integrated Circuit Industry Investment Fund on behalf of the central government, has approached GlobalFoundries for a possible cooperation via an investment bank, or in other words, to let themselves be bought by Hua Capital for an undisclosed sum of money.

According to DigiTimes, which quotes Taiwanese sources inside the semiconductor industry, the Chinese want to secure GlobalFoundries' 14nm FinFET process manufacturing rather quickly. It appears that the Chinese Government plans to improve its existing Semiconductor Manufacturing International Corporation (SMIC) manufacturing process densities via quick buy-offs of more advanced semiconductor foundries like GlobalFoundries.

The decision to do so is quite logical, but it just shows how desperate the Chinese are to develop a state-owned foundry, just as desperate as they seem to be to move into the non-volatile NAND memory industry when attempting, quite insistently, to buy Micron.

Wherever the Chinese go, they bump into Americans

While in Micron's case they have some major impediments to overcome, like the U.S. government itself, when it comes to GlobalFoundries’ acquisition, they might bump into the same adversary after a much longer detour.

At the moment, GlobalFoundries is not a very profitable company for its current owner, the Advanced Technology Investment (ATIC). The firm was initially bought for developing manufacturing fabs in the United Arab Emirates, but the investment turned out not to be very financially sound on the long run, and it's likely that ATIC might want to sell it in the end. However, things aren't easy. Patent ownership of many fabrication processes at GlobalFoundries belong to IBM, while the 14nm FineFET process belongs to Samsung, both of which have strong links to their governments as well and would easily oppose such a takeover.

The Chinese IT industry plays a game where national interests are at stake

In case of the Koreans, the reasons behind this refusal are simple: if SMIC manages to buy GlobalFoundries, it would become the second largest semiconductor manufacturing company in the world, behind Taiwan's TSMC and ahead of Samsung, something that the Koreans will never allow.

On the American side, things are even simpler. If CFIUS (the Committee on Foreign Investment in the United States) refuses for a second time to sell Micron to the Chinese, there's no chance they'll let them have IBM's process manufacturing patents. Since IBM recently managed to break the 10nm process manufacturing and build the world's densest chip die on 7nm this July, it's clear that what IBM knows is not for everyone to buy. Especially the Chinese.