A Chinese microchip company has prepared a multi-billion-dollar bid to purchase Micron Technology Inc. If successful, it would be the largest Chinese takeover of a United States company and grant the Chinese access to important technology, the Wall Street Journal reported.
Tsinghua Unigroup Ltd. was willing to offer $21 a share for Micron technology, almost a 20 percent premium over the company's closing price on Monday.
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Micron’s products such as flash memory drives are commonly used to store data in smartphones, and they are the second largest developer of dynamic random access memory behind Samsung.
Handel Jones, president of the Silicon Valley consultancy International Business Strategies, says the main interest is in the U.S. company's products because they cannot create similar technology.
"They have decided that they really have to buy somebody because they can’t deliver the intellectual property themselves,"Jones told the Wall Street Journal. "I think there is a reasonable probability there will be an issue with government approval given a deal of this size."
China has not originally manufactured technology necessary for data storage. The takeover is thought to be part of a Chinese government initiative to create more sources of semi-conductors, a necessary element in smartphones and defense equipment.
The Committee on Foreign Investments in the United States, a government group that determines whether certain transactions are security risks, does not often look into cases such as these unless the companies themselves alert the agency.