In February 2017, China Huarong Asset Management Co., Ltd. (“Huarong International”, 02799.HK), together with Beijing Jianguang Asset Management Co., Ltd. (“Jianguang Asset Management”), through a joint offshore fund, finally concluded the acquisition of the standard products business of NXP Semiconductors (NASDAQ: NXPI) for a total of US$2.75 billion (approximately 18.1 billion yuan). It’s the largest overseas acquisition project by China in semiconductor industry.

The success of this acquisition means that Jianguang Asset Management is poised to become the largest and most profitable IDM enterprise in semiconductor industry in China. Jianguang Asset Management is already China’s largest IDM and the most profitable semiconductor enterprise, and enjoys a world leading advantage in automotive electronics and industrial control areas.

The standard products business of NXP leads the world in terms of coverage, capacity and profitability. According to official data from NXP, the application areas for its standard products business include automotive electronics, industrial control, telecommunication, consumer electronics, etc. It has over 20,000 clients with distinguished names spanning automotive, industry, computer, consumer areas. The customer base is quite diversified, without relying heavily upon a single one, and operational risks are therefore relatively low.

Compared with consumer electronics, semiconductors for industry and automotive are great in varieties, small in batch size, high in price and slow in upgrading. The threshold for the business is quite high, difficult to be accessed by domestic companies. The deal gains access to NXP’s several dozen production lines and hundreds of products. It will significantly fill the vacancies in China, and benefit the upgrading of China’s local IC industry.