Money won't buy power in the US, not by foreigners

Jul 21, 2015 07:16 GMT  ·  By

China is manufacturing almost everything today. All sorts of electronic components for all sorts of devices, except one thing, semiconductors. By acquiring Micron Technology for $23 billion (€22 billion), the Chinese hoped they would compete with the Korean and Taiwanese semiconductor giants.

However, Tsinghua's dreams have been shattered by no others than the US governmental authorities who stopped any further talks for reasons of national security concerns. The Committee on Foreign Investment in the United States (CFIUS), which has the power to stop mergers that might endanger national security has declared that such acquisition would've been under extreme regulatory scrutiny and would've made things on the long run extremely difficult for the Chinese to use any know-how from Micron without the US Government agreement.

The reasons why CFIUS stopped any merge between the Chinese company and Micron are rather simple, the American company is the last US-based DRAM manufacturer that also builds chips and computer modules for advanced weapons in the US.

Although representing a major industrial boost for the Chinese, the acquiring of Micron would've deprived US Defense Department of stateside chip-building facilities and as such it was regarded as a national security matter.

$23 billion won't buy US Military tech

However, Reuters believes Tsinghua Unigroup’s plans to acquire Micron were obviously strategic and political since the company is controlled directly by Beijing, having President Xi Jinping himself among its alumni, and is backed by China's central government.

Tsinghua Unigroup transformed into a major semiconductor manufacturer after buying Chinese chipmakers RDA Microelectronics and Spreadtrum with over $1.6 billion (€1.47 billion) last year. Being overshadowed still by Asian giants like Samsung and TSMC, Tshingua hoped it would develop as an undisputed semiconductor powerhouse in Asia and be backed by the Chinese government to develop major civilian and military products that would help China on the long run.

However, with this new bump in Tsinghua's road to glory, it seems that China will have to wait a while until catching a new opportunity to buy another semiconductor manufacturing company at a low cost and enter the world's extremely expensive semiconductor manufacturers club.