AAMA Semiconductor Dinner in Palo Alto
(left) Dr Robert Lee, Mr David K Lam, Mr John Lo, Mr Charles Cheng (right)
With the growth of new computer interfaces ranging from smartphones to smart watches to home automation to connected cars, semiconductors play a key role in the next generation of human-to-machine interaction. This sector is at the epicenter of the disruption, innovation and investment wave that will define how individuals connect with each other and their surroundings. While the US continues as an engine of innovation in this sector, over half of all semiconductors created every year pass through China’s supply chain. US-China cross-border semiconductor investment, M&A and partnership activity is at a fever pitch as the “post-PC” era takes shape.
Amidst this backdrop of deeper ties, two events in Washington have created existential threats to the slow or halt this momentum. First, Donald Trump ran his successful presidential campaign in part on a nationalist agenda, singling out China as an unfair actor in the global business community. His recent communications with Taiwan further signal a new direction in US-China policy, which will certainly impact Chinese involvement in the semiconductor industry.
Meanwhile, the U.S.-China Economic and Security Review Commission recommended in November that the Committee of Foreign Investment in the US (CFIUS) ban acquisitions of US companies by state-owned companies in China. This recommendation cast a pall over the semiconductor industry where several profile acquisitions of US companies by state-backed Chinese funds have taken place.
2016 was a period of rapid consolidation and disruption in the semiconductor industry. There were also some positive developments in 2016, including high profile mergers (both public and private) at high valuations, five IPOs, and a slight uptick in early stage investment (albeit we are not going to approach 1990s levels any time soon). Developments in the prior year will be covered to the extent they are likely to extend into 2017. A major focus of the discussion will be on predictions for the industry in 2017 and approaches to thriving in it.