Tsinhgua Unigroup Ltd., the biggest microchip company in China, is preparing a $23 billion bid for memory chip maker Micron Technology (MU), according to The Wall Street Journal.
If it goes ahead, the bid would be the biggest ever acquisition of a U.S. Company by a Chinese one, dwarfing the $7.1 billion purchase of Smithfield Foods by Shuanghui International in 2013.
However, the WSJ said that the deal is still only being prepared, and quoted a Micron spokesman as saying that it hadn’t received an offer.
If it does go ahead, the deal is likely to attract the scrutiny of U.S. Officials, who have blocked Chinese takeover attempts in the past on security grounds–notably, CNOOC’s bid for oil producer Unocal Inc. In 2005.
The body most likely to review it would be the Committee on Foreign Investments in the United States, which brings together officials from more than a dozen government departments and agencies, the WSJ said.
Tsinghua Unigroup does have some friends in the U.S. Though. Intel (INTC) bought a 20% stake in the company last year, while Hewlett-Packard (HPQ) sold its Chinese-based networking subsidiary to it in May.
The state-owned company, set up by academics at the elite Tsinghua University, has taken upon itself the role of becoming a national champion in the chip-making sector, where it has lagged U.S., Taiwanese and Korean companies. China set up a $20 billion state-backed fund last year to bolster its expertise in the sector.
Tsinghua’s options for buying in expertise rather than developing it have narrowed in recent weeks due to a wave of consolidation in the sector, with Broadcom Corp. Buying Avago Technologies Ltd. (AVGO) for $37 billion, and Intel agreeing to buy Altera for $16.7 billion.
A deal would be a lot cheaper for Tsinghua now than it would have been last year, when Micron’s shares were still supported by cyclical tailwinds. They’ve fallen by more than 50% since then–due also in part to the perception that it is missing out on the consolidation trend.