Derisking Energizes China’s Greenfield Chipmaking Investments

A decade ago, ample capital and Beijing’s policy guidance to acquire overseas technology triggered explosive growth in China’s outbound semiconductor investment. Chinese firms approached almost every major global semiconductor firm for potential takeovers and launched tens of billions of dollars worth of acquisitions in 2015 and 2016. Many of these transactions were withdrawn or formally blocked by regulators, but Chinese firms managed to complete around $14 billion worth of acquisitions between 2015 and 2018, including prominent chip designers and front-end manufacturers in Europe and North America such as Nexperia (Netherlands, $2.7 billion), Lixens (France, $2.6 billion), and Omnivision (US, $1.9 billion).

Since 2017, new Chinese outbound investment in the semiconductor industry has dropped off significantly as chips have come into the spotlight of US-China technology competition. As overseas regulators increased their scrutiny of Chinese high-tech takeovers, Beijing decided to direct its efforts toward nurturing domestic capacity and reducing reliance on overseas suppliers.