Shenzhen’s Longsys Electronics, a major client of US memory chip maker Micron Technology in China, has successfully acquired a mainland plant from Taiwan’s Powertech Technology for $132 million. The acquisition involves a 70% equity stake in Powertech Technology (Suzhou), a prominent semiconductor assembly, packaging, and testing company located in Jiangsu province.
Longsys initially paid $65.8 million for the acquisition, with the remainder to be paid at a later date. Its stock in Shenzhen closed at 96.70 yuan (US$13.25), marking a 1.07% increase on Thursday.
Longsys’ recent corporate acquisition underscores the ongoing efforts of mainland Chinese tech companies to enhance China’s role in the global semiconductor manufacturing supply chain.
The mainland is forecasted to expand its presence in the semiconductor supply chain, encompassing foundry work and outsourced assembly and test (OSAT) services, while Taiwan’s share is anticipated to decline due to shifts in government semiconductor policies and geopolitical tensions, as outlined in a recent report from market research firm IDC.
China’s global share in OSAT work is expected to rise to 22.4% by 2027, up from 22.1% in the previous year. Micron served as Longsys’ leading supplier from 2018 until mid-2021, accounting for over 33% of the total procurement contracts.
In 2017, Longsys acquired the ‘Lexar’ brand from Micron, aiming to expand its presence in the removable storage market, encompassing products such as memory cards and USB flash drives. For Micron, its situation in mainland China has undergone significant changes since the country’s internet watchdog initiated a cybersecurity investigation into the company in March. In May, the Cyberspace Administration of China declared that Micron’s products did not meet network security standards, leading to a partial ban on their sale in the country.
Approximately four weeks after this ban was imposed, Micron announced plans to invest 4.3 billion yuan in upgrading its chip packaging facility in Xian, the capital of northwest Shaanxi province. This investment involved acquiring the operations of its outsourcing partner, Powertech, and constructing new facilities on the site. This move was part of the company’s strategy to mitigate the impact of China’s sanctions. In August, Micron appointed Jeff Li Xinming as the head of its China government affairs team, signaling the company’s effort to improve relations with Beijing. Micron is also set to participate in China’s International Expo in early November in Shanghai, marking its first involvement in the event, according to a report by China Business News.
Despite Beijing’s push for self-sufficiency and reducing reliance on American-made technologies, China faces challenges in the semiconductor market due to restrictions from the US and its allies. Japan, South Korea, and Taiwan have joined the US-led Chip 4 Alliance, an initiative viewed by Beijing as an attempt to exclude China from global semiconductor supply chains.
(Source: Tracy Qu | South China Morning Post)
