Smart factory platform maker Tztek Technology will acquire semiconductor testing firm, MueTec Automated Microscopy and Messtechnik GmbH, for €18.2 million ($20.5 million). Caixin reported on the transaction Tuesday after uncovering a Shanghai Stock Exchange filing.
The Chinese corporation is buying the German brand to break into the component evaluation market amid rising international contention.
How Tztek Benefits From Buying MueTec
On its face, Tztek purchasing another company in an unrelated field, during a global recession no less, seems odd.
The Suzhou headquartered company specializes in producing machine learning-program directed multifaceted automated manufacturing systems. But its new Munich centered property is known for developing and releasing high-performance industrial component fabrication inspection solutions. Moreover, TrendForce recently reported the global semiconductor market would contract by 1.3 percent this year due to the coronavirus pandemic.
Because of the outbreak’s disruptive impact on the chip sector, firms probably are not interested in upgrading their equipment right now. Even so, the connected manufacturing facilitator saw so much potential in MueTech, it agreed to buy its €2 million ($2.24 million) outstanding debt.
Tztek likely sees its latest acquisition as part of a larger long-term, post-pandemic recovery strategy. The Sino brand is undoubtedly aware that India, the United States, and Taiwan have launched incentive programs to increase domestic component production capacity, in part as a reaction to China’s push toward semiconductor independence. Beijing will likely increase its microelectronics development spending in response, which will prompt new trade restrictions.
Therefore, Tztek has set itself up as a pickax company in a goldrush mining town with its new corporate purchase.
International Competition Creates Regional Opportunities
Notably, Tztek is not the only Chinese brand to identify new opportunities because of increasing international competition.
Earlier this month, BYD Semiconductor raised ¥1.9 billion ($268 million) to enhance its electrified automotive component manufacturing capability. Last week, the firm raised another ¥800 million ($113 million) for the same reason. The company’s leadership conducted back-to-back fundraising rounds because it is the only Sino corporation capable of producing certain electric vehicle parts.
As trade conditions continue to worsen, imported semiconductors will become harder to find in China. As foreign suppliers dominate the country’s battery-powered vehicle component sector, BYD’s market share could expand greatly in the near-term. Thanks to its recent cash injections, it has the resources to meet a sudden spike in demand.
In fact, the chipmaker would probably do well to invest in Tztek and MueTech’s products to optimize its factory operations. As a new Sino-American commerce conflict looms, other Chinese brands might want to follow suit.