U.S. blocking Chinese acquisitions of global tech firms a "red flag" - Chinese state-backed tabloid

MagnaChip Semiconductor

02/09/2021 02:55

SHANGHAI, Sept 2 (Reuters) - Chinese state-backed tabloid
the Global Times called U.S. efforts to block cross-border
acquisitions of tech companies a "red flag" that impedes China's
tech sector and disrupts the growth of the global tech sector.
    The outlet, which is published by the People's Daily,
China's official newspaper for the ruling Communist Party,
argued a recent attempt to block a Chinese purchase of a Korean
chip company "represents a dangerous precedent for the industry
as a whole."
    "If the US succeeds in blocking the deal this time, it could
set a very bad precedent for global high-tech mergers and
acquisitions, further consolidating the industrial concentration
in the US," the op-ed read. 
    In March, China-based private equity group Wise Road Capital
announced it would purchase Korea's Magnachip Semiconductor Corp
 MX.N  for $1.4 billion.
    On Monday, Magnachip said in an SEC filing that the U.S.
Department of Treasury, in a letter to the company's legal
counsel last Friday, said the acquisition posed "risks to the
national security of the United States."  urn:newsml:reuters.com:*:nL4N2Q20R1
    The chip sector has become a hotbed for tensions between the
U.S. and China. 
    Both countries are pouring billions of into their domestic
industries, with the recognition that semiconductors are
critical to national security and economic development.
    Cross-border acquisitions, which require approval from
regulatory bodies, have at times fallen apart because of
government objections.
    In 2018, Qualcomm Inc's  QCOM.O  planned $44 billion
acquisition of Dutch chipmaker NXP Semiconductors NV  NXPI.O 
failed after China's anti-monopoly regulator signaled it would
not approve the deal.
    That same year, Singapore's Broadcom Inc  AVGO.N  withdrew
its $117 billion bid to acquire Qualcomm after Washington's
Committee on Foreign Investment in the United States (CFIUS)
said the purchase could endanger the U.S' national security by
aiding China.    

 (Reporting by Josh Horwitz. Editing by Gerry Doyle)
 ((Josh.Horwitz@thomsonreuters.com; +86 21 20830007;))