Dec. 13 – Acquisitive semiconductor company Tsinghua Unigroup and a sister company have acquired 7% of Germany’s Dialog Semiconductor, extending their recent drive to build up a chip-making empire through domestic and overseas acquisitions.
The latest stake purchase comes as Chinese companies more broadly try to buy foreign chip-making technology under a Beijing-led initiative to build up the sector. But many of those efforts have been rebuffed by foreign governments, which worry about selling such cutting-edge companies to Chinese buyers, often with ties to Beijing.
Dialog’s disclosure also comes amid a major sell-off of its shares over the last week, following reports that the company could lose global giant Apple Inc. as one of its major customers. Dialog disclosed the purchase of its shares by Unigroup and Unis Technology in a filing to the local securities regulator, after the pair collectively bought 7% of its shares, passing a threshold that requires a public disclosure. Dialog didn’t comment on the stake sale, but such disclosures often come after investors buy large stakes in target companies through open-market purchases.
Dialog said the 7% threshold had been crossed on Nov. 30, and it was notified of the fact on Tuesday. The stake would have a value of about 126 million euros ($149 million), based on Dialog’s latest market capitalization. Dialog did not provide any comment on the purchase beyond the regulatory filing. The company’s stock has lost about a third of its value over the past week, after it acknowledged that it could lose Apple as a major customer if the U.S. tech giant decides to self-produce similar chips to ones that it now buys from Dialog.
“Although Dialog expects to remain Apple’s main supplier of PMIC (power managed integrated circuit) designs, Dialog recognizes Apple has the resources and capability to internally design a PMIC and could potentially do so in the next few years,” Dialog said in a statement on Tuesday. “Dialog does not have reason to believe its current expectations of 2018 Apple business would be impacted by such potential actions by Apple.”
The purchase of Dialog’s shares by Unigroup extends a buying spree by the latter and other Chinese buyers scouring the globe for foreign chip-making assets. China is the world’s largest consumer of such chips that power everything from smartphones to microwave ovens. But it imports most of those, and wants to become a larger player in a sector that carries higher margins that simple manufacturing.
Companies from the Tsinghua family have succeeded in a few offshore acquisitions, but have also failed in some high-profile cases. Tsinghua companies previously tried to buy U.S. memory chip giant Micron Technology Inc. and large stakes in several Taiwanese manufacturers, but ultimately were rebuffed due to political sensitivities. More recently, other Chinese buyers have been blocked by the U.S. from buying German chip maker Aixtron SE and U.S.-based Lattice Semiconductor Corp. over similar concerns.