Chinese state-backed tabloid the Global Times called US 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 for US$1.4 billion.
On Monday, August 30, Magnachip stated in an Securities and Exchange Commission filing that the US Department of Treasury, in a letter to the company’s legal counsel last Friday, wrote that the acquisition posed “risks to the national security of the United States.”
Both countries are pouring billions 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.
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