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China's antitrust regulator is scrutinizing the attempt by Diodes Inc. – an American manufacturer and supplier of discrete, logic, analog and mixed-signal semiconductors – to acquire the Taiwan-based Lite-On Semiconductor Corp. along with its Shanghai-based affiliate, On-Bright Electronics Inc. According to Bloomberg, the scrutiny was necessitated by fears in China that the $428 million deal would deliver the Chinese affiliate of Lite-On into American hands and compromise national interests.
As a reference, Diodes Inc. has a market capitalization of $2.33 Billion and a trailing twelve-month income of $138.3 million. On the other hand, On-Bright – the Chinese maker of chipsets for power management that's listed in Taipei – has a market cap of NT$9.88 billion ($324 million).
The Texas-based Diodes Inc. had launched its bid in August for Lite-On Semiconductor which, as per regulatory filings, holds almost a third of the Chinese Bright-On firm. The deal was expected to conclude by April 2020. Moreover, a Lite-On Semiconductor representative informed Bloomberg that Diode had filed for an antitrust review by Chinese authorities in mid-September.
This development marks the growing suspicion that American M&A activities presently garner in China. The State Administration for Market Regulation in China seems to be receptive to the cautionary note emanating from multiple industry organizations regarding this acquisition. Consequently, the regulator may call for the exclusion of the Chinese affiliate from this deal.
Diodes Incorporated and Lite-On.
Related: How China Plans to Lead the Computer Chip Industry
(Score: 3, Informative) by c0lo on Thursday November 21 2019, @10:43AM (2 children)
Given China is involved with UHV DC power transport [economist.com], I find the reason of "national interest" as plausible (rather than a payback to Trump's trade war).
https://www.youtube.com/watch?v=aoFiw2jMy-0 https://soylentnews.org/~MichaelDavidCrawford
(Score: 2) by Farkus888 on Thursday November 21 2019, @12:17PM
This is an excellent point, without it it would be obvious that China benefits from the merger. The argument from the actually informed is largely about stealing business IP. This merger would give them more opportunity to steal from Diodes Inc. After all, bigger companies outsource more and they'd already have facilities there. With your extra information, it shows that the US would have the opportunity to steal a tech they developed in house and are ahead on.
(Score: 2) by loonycyborg on Thursday November 21 2019, @04:13PM
If some Chinese company is bought and made part of US company then trade restrictions suddenly start to apply to it, most likely causing a huge disruption because they have to break ties to their old Chinese partners, so it's rational for Chinese government to not want it.