Chinese GPs set up semiconductor JV with Qualcomm

In addition to the two GPs, Jianguang Asset Management (JAC Capital) and Wise Road Capital, a subsidiary of Datang Telecom Technology is participating in the joint venture, which will be known as JLQ Technology. Datang and NXP have an existing joint venture in China that focuses on developing semiconductor solutions for electric and hybrid vehicles.

“This joint venture represents the organic combination of financial and industry resources of Qualcomm, JAC Capital, Datang Telecom, and Wise Road Capital, the synergy of which is advantageous to local technology innovation,” said Brighten Li, chairman of JAC Capital’s investment evaluation committee, in a statement. “It also represents an important step for JAC Capital as an ecosystem player in the global semiconductor industry.”

Part of China Jianyin Investment, JAC Capital was established to support industrial transformation in China by investing in high-tech industries including semiconductors, IT and networking, data services, cloud computing, and telecommunications. It formed a joint venture with NXP in 2015 and bought the Dutch chipmaker’s radio-frequency power unit for $1.8 billion later the same year.

JAC Capital and Wise Road Capital – which claims to be a global PE fund with a similar mandate – agreed to buy NXP’s standard products division last June for $2.75 billion. Now called Nexperia, the division supplies semiconductors for automotive, industrial, computing and consumer applications. It contributed $1.2 billion out of NXP's $6.1 billion in total revenue in 2015.

The divestment was intended to allow NXP to focus on its more significant high-performance mixed-signal business. Last October, Qualcomm submitted a tender offer for the company that valued it at approximately $47 billion.

Semiconductor assets have attracted considerable interest from Chinese investors. In addition to JAC Capital and Wise Road’s carve-out from NXP, Canyon Bridge Capital Partners – a newly-formed US-based buyout firm backed by Chinese LPs – agreed to acquire Lattice Semiconductor for $1.3 billion last November.

Tsinghua Holdings-backed Unigroup is the best-known serial investor in this space, but not all of its deals have been successful, largely due to regulatory concerns. The company responded to these disappointments by shifting its focus onshore, announcing plans to invest more than $50 billion to build memory chip factories in Nanjing and Wuhan.

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• Topics
• Greater China
• Expansion
• Technology
• China
• Qualcomm Ventures