The Fleeting Possibility of Merging the World’s Largest Chip Manufacturer in 2017: The Pain of Chinese Chip Industry


  • Lingkai Kong Izmir University of Economics, Izmir, Turkey
  • Runyang Shu ESSEC Business School, Paris, France
  • Hao Lu Beijing Foreign Studies University, Beijing, China
  • Qiaozhi Xiong Beijing Foreign Studies University, Beijing, China
  • Peng Wu Sun Yat-sen University, Guangzhou, China
  • Rui Xue Beijing Foreign Studies University, Beijing, China



Chip Sector, Financial Analysis, Mergers and Acquisitions, Semiconductors


This article examines a possible Chinese semiconductor industry’s merger and acquisition in 2017, the year before the Sino-US trade war and US high-tech sanctions against China. The feasibility of a merger between Tsinghua Unigroup and Taiwan Semiconductor Manufacturing Company is thoroughly examined as well as their development history and the current financial standing. The financial data collected form the two companies’ annual report was analyzed using multiple corporate valuating models. We discovered that the industrial policy and financial reports in 2017 favored the merger, but the combination ultimately collapsed, which was quite a pity for Chinese chip sector. The research contributes to an in-depth comprehension of China’s semiconductor business and serves as a model for future financial analyses of comparable sectors.


Download data is not yet available.


Almeida, P., & Kogut, B. (1999). Localization of knowledge and the mobility of engineers in regional networks. Management Science, 45(7), 905–917.

Baum, J. A. C., & Ingram, P. (1998). Survival-enhancing learning in the Manhattan hotel industry, 1898–1980. Management Science, 44(7), 996–1016.

Biggart, N. W. (1996). Enterprise and the State in Korea and Taiwan. American Journal of Sociology, 101(6), 1726–1727.

Cai, Y., Zhang, H., & Pinheiro, R. (2015). Institutionalization of technology transfer organizations in Chinese universities. European Journal of Higher Education, 5(3), 297–315.

Chang, M. (2011). Pure Play. IEEE Solid-State Circuits Magazine, 3(4), 21–24.

Chao, C.-H. (2012). The influence of capital structure on organizational performance at Taiwan-listed info-electronics companies: Using corporate governance as the Moderator. American Journal of Business and Management, 1(1), 60.

Chen, J. Y. (2020). The mirage and politics of participation in China’s platform economy. Javnost - The Public, 27(2), 154–170.

Chen, T.-C., Guo, D.-Q., Chen, H.-M., & Wei, T.-T. (2019). Effects of R&D intensity on firm performance in Taiwan’s semiconductor industry. Economic Research-Ekonomska Istraživanja, 32(1), 2377–2392.

Chien, C. F., Shih, C., & Chang, J. (2009). The TSMC Way: Meeting Customer Needs at Taiwan Semiconductor Manufacturing Co. Harvard Business School Technology & Operations Mgt. Unit Case, (610-003).

Edgington, D. W., & Hayter, R. (2000). Foreign Direct Investment and the Flying Geese Model: Japanese Electronics Firms in Asia-Pacific. Environment and Planning A: Economy and Space, 32(2), 281–304.

Ernst, D., Lee, H., & Kwak, J. (2014). Standards, innovation, and latecomer economic development: Conceptual issues and policy challenges. Telecommunications Policy, 38(10), 853–862.

Hauge, J. (2019). The role of manufacturing versus services in economic development. In Transforming Industrial Policy for the Digital Age (pp. 12–36). Edward Elgar Publishing.

Heikal, M., Khaddafi, M., & Ummah, A. (2014). Influence analysis of return on assets (ROA), return on equity (ROE), net profit margin (NPM), debt to equity ratio (DER), and current ratio (CR), against corporate profit growth in automotive in Indonesia stock exchange. International Journal of Academic Research in Business and Social Sciences, 4(12).

Hobday, M. (1998). Latecomer catch-up strategies in electronics: Samsung of Korea and ACER of Taiwan. Asia Pacific Business Review, 4(2-3), 48–83.

Hsu, J. Y. (2012). New Firm Formation and Technical Upgrading in the Taiwanese Semiconductor Industry: Is Petty Commodity Production Still Relevant to High-Technology Development?. Petty Capitalists and Globalization, 145.

Ip, P.-K. (2008). Corporate social responsibility and crony capitalism in Taiwan. Journal of Business Ethics, 79(1–2), 167–177.

Jaggi, B., & Gul, F. A. (1999). An analysis of joint effects of investment opportunity set, free cash flows and size on corporate debt policy. Review of quantitative finance and accounting, 12(4), 371-381.

Kim, L. (1980). Stages of development of industrial technology in a developing country: A model. Research Policy, 9(3), 254–277.

Kothari, S. P., & Ball, R. (1994). Financial statement analysis. Mcgrew-Hill Companies.

Lee, C.-S., & Pecht, M. (2020). The Taiwan Electronics Industry.

Lo, L.-C. (2022). Facilitating the market with a gift: The politics of the ECFA between China and Taiwan (2008–2016). Asian Studies Review, 1–18.

Martin, J. D., & Scott, D. F. (1974). A Discriminant Analysis of the Corporate Debt-Equity Decision. Financial Management, 3(4), 71–79.

Mathews, J. A., & Cho, D. (1999). Combinative capabilities and organizational learning in latecomer firms: the case of the Korean semiconductor industry. Journal of World Business, 34(2), 139–156.

McCann, P., & Arita, T. (2006). Clusters and regional development: Some cautionary observations from the semiconductor industry. Information Economics and Policy, 18(2), 157–180.

Minbaeva, D., Pedersen, T., Björkman, I., Fey, C. F., & Park, H. J. (2003). MNC knowledge transfer, subsidiary absorptive capacity, and HRM. Journal of International Business Studies, 34(6), 586–599.

Newberry, K. J., & Novack, G. F. (1999). The effect of taxes on corporate debt maturity decisions: An analysis of public and private bond offerings. Journal of the American Taxation Association, 21(2), 1-16.

Ozkan, A. (2000). An empirical analysis of corporate debt maturity structure. European Financial Management, 6(2), 197-212.

Perry, T. (2011). Foundry father. IEEE Spectrum, 48(5), 46–50.

Poon, J. P. H., Hsu, J.-Y., & Jeongwook, S. (2006). The geography of learning and knowledge acquisition among Asian latecomers. Journal of Economic Geography, 6(4), 541–559.

Rimol, M. (2021). Gartner Says Worldwide Semiconductor Revenue Grew 26% in 2021. Gartner.

Salim, M. A., & Pardiman, P. (2022). The role of dividend policy as intervening variables on the effect of earning per share, debt equity ratio and price book value on stock price. Jurnal Bisnis Dan Manajemen, 9(1), 77–86.

Tsai, T., & Cheng, B.-S. (2006). The Silicon Dragon. Edward Elgar Publishing.

Tung, A.-C. (2001). Taiwan’s semiconductor industry: What the state did and did not. Review of Development Economics, 5(2), 266–288.

Winston, G. C. (1974). The Theory of Capital Utilization and Idleness. Journal of Economic Literature, 12(4), 1301–1320.

Wu, S.-Y., Hung, S.-C., & Lin, B.-W. (2006). Agile strategy adaptation in semiconductor wafer foundries: An example from Taiwan. Technological Forecasting and Social Change, 73(4), 436–451.

Zenglein, M. J., & Holzmann, A. (2019). Evolving made in China 2025. MERICS papers on China, 8, 78.

Zhang, L., & Lan, T. (2022). The new whole state system: Reinventing the Chinese state to promote innovation. Environment & Planning A.




How to Cite

Lingkai, K., Runyang, S., Hao , . L., Qiaozhi, . X., Peng, W., & Rui, X. (2022). The Fleeting Possibility of Merging the World’s Largest Chip Manufacturer in 2017: The Pain of Chinese Chip Industry. American Journal of Economics and Business Innovation, 1(3), 24–35.