December 11, 2015 / 10:42 AM / in 3 years

China's Unigroup to pay $2 billion for stakes in two Taiwan chip companies

TAIPEI (Reuters) - Two Taiwanese chip testing and packaging firms said on Friday Tsinghua Unigroup will buy stakes in them for $2 billion in total, the latest step by the Chinese state-backed technology conglomerate toward a goal of becoming a major global semiconductor player.

The logo of Tsinghua Unigroup is seen at its office in Beijing, China, November 15, 2015. REUTERS/Kim Kyung-Hoon

Tsinghua Unigroup is investing a total of T$68.7 billion ($2.09 billion) for owning a quarter each of ChipMOS Technologies Inc (8150.TW) and Siliconware Precision Industries Co Ltd (SPIL) 2325.TW, the Taiwanese companies said.

The Chinese group’s chairman told Reuters in November it plans to invest 300 billion yuan ($46.48 billion) over the next five years in a bid to become the world’s third-biggest chipmaker.

Tsinghua Unigroup, which is leading China’s development of a national semiconductor industry, has already spent $10 billion on mergers and acquisitions (M&As) over the past two years.

Friday’s deals come after Tsinghua Unigroup announced in October a $600 million investment for a 25 percent stake in another Taiwanese chip test and packaging firm, Powertech Technology Inc (6239.TW).

All three deals still need respective shareholder approvals and are subject to review by Taiwanese authorities.

Tsinghua Unigroup was not immediately available for comment.

China’s unabashed interest in foreign chipmakers in an already record year of deals has been quickly read by rivals as a sign that M&As will get more competitive and target companies will get more expensive.

At the same time, the Chinese are chipping away at the semiconductor dominance traditionally held by the United States and Taiwan.

Siliconware Precision holds about a 15 percent stake in ChipMOS, which is majority owned by ChipMOS Technologies (Bermuda) Ltd (IMOS.O).

Tsinghua Unigroup will own 24.9 percent in Siliconware after a private placement worth T$56.8 billion and own 25 percent in ChipMOS after a separate private placement worth T$11.9 billion.

The acquisitions will come at a premium. Shares in ChipMOS closed down 0.2 percent on Friday at T$32.15, compared to the T$40 a share Tsinghua Unigroup will pay for them.

And shares in Siliconware Precision settled off 0.4 percent at T$45.50, compared to Tsinghua Unigroup’s purchase price of T$55 a share.

Editing by Muralikumar Anantharaman

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