National Day Holiday: China's Semiconductor Industry Shocks the World Again

In the blink of an eye, the National Integrated Circuit Industry Investment Fund (hereinafter referred to as the "Big Fund") has been established for one year. Over the past year, global semiconductor industry investment and mergers and acquisitions have surged, and China has risen from obscurity to prominence. With the support of the Big Fund, Chinese semiconductor enterprises have made several moves in the market, such as JCET's acquisition of STATS ChipPAC, the world's fourth largest testing and packaging company, and Tsinghua Unigroup's attempted acquisition of Micron Technology, a leading US memory company, which have attracted strong attention from the industry.

The National Day holiday is one of China's most grand festivals. While people across the country were enjoying the holiday, China's semiconductor industry was far from idle. On the evening of September 30, Tsinghua Unigroup announced that it would subscribe to 40,814,802 newly issued common shares of Western Digital Corporation at a price of US$92.5 per share, with a total investment of approximately US$3.8 billion, or about RMB 24 billion. Upon completion of the transaction, Unigroup would hold approximately 15% of Western Digital's common shares, becoming its largest shareholder and securing a seat on the board of directors. Soon after, another rising star in the semiconductor industry, Montage Technology, announced a US$430 million joint bid with Diodes Incorporated to acquire the US-listed Pericom Semiconductor.

In addition, the Hua Capital Investment consortium, composed of Qingxin Huachuang and others, received approval from the Committee on Foreign Investment in the United States (CFIUS) for its acquisition of OmniVision Technologies, thereby essentially clearing the regulatory hurdles. This has benchmark significance for subsequent overseas mergers and acquisitions by Chinese semiconductor companies.

Beyond corporate investments and acquisitions, another significant event took place: Kao Ya-chyuan, a godfather figure in Taiwan's memory industry, Chairman of Inotera Memories and General Manager of Nanya Technology, recently resigned from his position as Nanya Technology's General Manager (retaining his chairmanship of Inotera) to join Tsinghua Unigroup as Executive Vice President, responsible for Unigroup's global semiconductor memory business.

This sent shockwaves through Taiwan's semiconductor industry. However, unlike previous instances where Taiwan's industry circles emphasized the rise of mainland China's "red supply chain," perhaps fatigued by the ASE and SPIL soap opera, the industry has begun to truly "talk business." Taiwan's political, business, and academic circles have offered various interpretations. Some believe Kao's background will facilitate cooperation between Unigroup and Micron; others think Kao will enable a "US-China-Taiwan" alliance to counter South Korea; some worry it will marginalize Taiwan's memory industry; others believe it will have no

impact at all, and the list goes on.

Moreover, unlike previous instances of Taiwanese semiconductor talent moving to the mainland, where Taiwan would impose various obstacles and even overreact with suspicion, this time Taiwan's industry has not sought to "do anything" to Kao. Taiwan's Investment Commission has also stated there are no special restrictions. However, Unigroup's application to establish a subsidiary in Taiwan was straightforwardly rejected.