More news on the Grace-Hua Hong merger

I was in China about a week ago and a well informed source close to parties in both firms suggested that the merger is definitely going ahead. The likely CEO of the merged company will be Grace's Schumacher not Hua Hong's TY Chiu. Indeed, the source speculated that TY Chiu would probably leave Hua Hong for a second time because it is too hard to run this state-owned company due to government interference. Supposedly the planned merger will be basically financial with the two companies still maintaining operational independence.

First Solar to China

First Solar, US-based and the world's largest solar panel maker, has been seen as competitive with Chinese imports because it uses thin film (technically speaking it is cadmium telluride) technology. Admittedly this blog has also subscribed to this optimistic point of view (see my Aug. 26 post). However, now First Solar has announced plans to build a 2 GW facility in Ordos, Inner Mongolia (link here). One could decry the offshoring of arguably technology-intensive manufacturing, but the price of silicon, which is the material with which Chinese firms make their solar panels, is falling dramatically. In fact, the price of silicon is falling so fast that some Chinese solar panel firms, such as Trina, claim that their unit costs per kwh will be cheaper than First Solar's by 2010. Thus, First Solar's offshoring is an understandable reaction to these shifting materials costs, but this case provides no reassurance to those who aspire to compete with China-based manufacturing through investments in technology.

GlobalFoundries and Chartered: Impact on SMIC

The purchase of Chartered by GlobalFoundries should impact the foundry industry for years to come, but is it good or bad for SMIC? Mark Lapedus at EE Times (link here) argues that SMIC is a winner in the wake of this merger because there is one less leading edge foundry firm in the marketplace. I am not convinced the implications are actually so positive for SMIC because the GlobalFoundries-Chartered combination is more formidable than Chartered alone. And let's face it, among the big four foundires, SMIC and Chartered were battling to see who would not end up in fourth place so enhancing Chartereed's competitiveness impacts SMIC more negatively than TSMC or even UMC. With AMD as a steady client, sharing the cost of IBM's licensing fees over a larger scale firm and the deep pockets of Abu Dhabi's Advanced Technology Investment Corporation (ATIC), the merged firm is much more of a threat than Chartered alone despite Singapore's lavish support for the firm over the years. Furthermore, the merger does not seem to consolidate the amount of mainstream CMOS capacity out there since GlobalFoundries did not have much of that prior to the merger.

Ctrip takeover as a window on Taiwan's debate on China

Some have assumed under Ma Yingjiu's leadership further substantial economic integration with Mainland China was a given for Taiwan. At least they did until Ma's ratings were thrashed by the ramshackle government response to Typhoon Morakot. However, even before this natural disaster, the media commentary on Ctrip's (China's Travelocity/Expedia) unannounced effective takeover of a controlling share of ezTravel, its Taiwanese equivalent, demonstrates the deep fissures in Taiwan on the issue of economic integration. The narrowly focused economics media, such as CENS, treated this news without alarm (link here) and the China Times, which occupies the middle ground in Taiwan's political specturm with a slight tinge of KMT blue, even heralded it as creating a Chinese travel services brand (link here) but the very green (i.e. pro-Taiwanese independence) Liberty Times treated it with alarm as an invasion by a Chinese company which was just masquerading as a foreign firm (link here).

China Solar Hype?

Keith Bradsher's piece in the New York Times yesterday (link here) suggests that China solar panel makers are going to take over the US market even as the US federal government subsidizes investment in solar energy. He makes the good point that some of these Chinese solar panel operators are heavily government supported i.e. subsidized, but there are some reasons not to count out US competitors just yet. While the Chinese use crystalline silicon to make their panels, the world's largest solar module maker, Arizona's First Solar, uses thin film technology to remain the world's cheapest panel maker per KWH.
Meanwhile EE Times has suggested that Centron Solar will provide the organization that links disparate Chinese solar panel makers to its own sales operation in the US (link here). However, there are questions about Centron's scale as a company and how many panel makers it actually represents (link here).

Inspur (Langchao) and Qimonda

Inspur (浪潮) has now publicly confirmed (link) that it is buying Qimonda's design center, reports of which I wrote about in my August 11 post. The rationale of realizing synergies and expanding across the value chain offered by Inspur for the purchase still seems rather dubious to me.

Jingxin and Freescale

A report on Netease claims that Jingxin, a fabless design subsidiary of Techfaith, has bought Freescale's mobile chip unit (link). If true, this represents a major coup for Techfaith and Jingxin. The acquisition will bolster the value of the design services Techfaith can offer and Jingxin through its ties to Techfaith will present a strong challenge to likes of Spreadtrum.