Inventory of the Top Ten Semiconductor Acquisition Failure Cases in 2017
In 2016, the semiconductor industry witnessed one of its most dynamic years in terms of acquisitions, with a level of activity and scale that rivaled the "wild" year of 2015. After two years of intense M&A activity, the sector seemed to cool down in 2017. Apart from Intel’s surprising $15.3 billion acquisition of Mobileye, major headlines were scarce. However, despite the apparent slowdown, several high-profile deals failed or were abandoned, revealing the challenges and complexities of the M&A landscape.
Looking at the first half of 2017, it was clear that while the number of semiconductor acquisitions remained high, their quality varied significantly. Many deals ended up being “Waterloo†moments—failures that made waves and sparked discussions across the industry.
One such case was Beijing Jun Zheng’s attempt to acquire OV and Sibico for RMB 12.6 billion. The deal aimed to strengthen its position in image sensors and build an integrated ecosystem. However, the acquisition ultimately collapsed due to regulatory concerns and financing limitations. After a ten-month suspension, the company resumed trading but faced a sharp drop, highlighting the risks involved in large-scale M&A.
Another notable failure was CanyonBridge’s bid to acquire Lattice Semiconductor. U.S. President Trump blocked the deal over national security concerns, marking a significant setback for Chinese investors. This event also led to legal issues for CanyonBridge's founder, Zhou Bin, who was accused of insider trading. The U.S. government’s stance sent ripples through the industry, making future acquisitions more complicated.
Ziguang Group’s attempt to acquire Yangtze River Storage also hit a roadblock. Despite initial interest and strategic alignment, the deal was terminated due to uncertainties surrounding the project’s profitability and long-term viability. Similarly, Silan Micron’s plan to acquire Lotte Wireless was called off due to unresolved legacy issues and complex shareholder structures.
Zhaoyi Innovation’s attempt to buy ISSI also fell apart after a supplier raised concerns about potential competition, leading to a last-minute termination. Meanwhile, Zhaoxin’s decision to walk away from Alibaba shares highlighted the difficulties in aligning valuations and strategic goals between parties.
Even larger players like China Mobile and Nokia faced setbacks, with some deals either delayed or completely abandoned. These failures underscored the growing complexity of cross-border M&A, especially when dealing with sensitive technologies and international regulations.
Despite these challenges, the semiconductor industry did not slow down. While the focus shifted toward R&D and innovation, M&A activity continued, albeit with more caution and scrutiny. Deals like Qualcomm’s proposed acquisition of NXP and Broadcom’s aggressive move to acquire Qualcomm signaled that the sector was still highly active, even if not as explosive as previous years.
In 2017, the semiconductor industry proved that while M&A can be a powerful tool for growth, it is also fraught with risks. From regulatory hurdles to internal misalignments, the lessons learned from these failed deals will likely shape future strategies in the industry.
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