Global M&A and the Development of the IC Industry Ecosystem in China: What Can We Learn from the Case of Tsinghua Unigroup?

: The integrated circuit (IC) industry is the foundation of the information industry, and its level of development is an important manifestation of the economic and technological strength of a country. At present, the IC industry is primarily monopolised by developed countries. Although China is the world’s largest consumer of semiconductors, it has a disproportionately small international market share of production and a very low domestic chip self-sufﬁciency rate, lagging far behind Europe, the United States, Japan, and South Korea. The process of promoting the development of China’s IC industry ecosystem is discussed based on a case study of Tsinghua Unigroup and the observation and analysis of its recent international mergers and acquisitions. The resulting conclusions suggest valuable mechanisms that could beneﬁt the technological improvement of late-developing countries and help them close the gap with more developed countries. Relevant theory for the industrial ecosystem is enriched, providing a useful reference for the development of the IC industry in late-developing countries.


Introduction
The integrated circuit (IC) industry is the foundation of the information industry, and its level of development is an important manifestation of the economic and technological strength of a country. With the arrival of waves of global information, networking, and knowledge, the state of the IC industry has become increasingly important. The IC industry is a fundamental industry that involves economic construction, people's lives, and information security. At present, however, the IC industry is primarily monopolised by developed countries such as the United States, Japan, and Korea. For developing countries, a major challenge is how to narrow the gap with developed countries.
In the past, most domestic IC companies in China were small, weak, and characterised by low competitiveness. The links and cooperation between upstream and downstream companies and other related companies were weak, as the IC industry in China had not successfully established a dynamic industrial ecosystem. In 2000, the Chinese government began to focus on the shortcomings of its IC industry development. The State Council of the People's Republic of China issued "Several Policies to Encourage the Development of the Software Industry and the Integrated Circuit Industry", leading the Chinese IC industry to enter an initial stage of development. In 2014, the "Outline of National Integrated Circuit Industry Development Promotion" was released, further expanding the development of and policy focus on China's IC industry.
Tsinghua Unigroup is a high-tech enterprise of Tsinghua University. In recent years, it has rapidly become an influential IC company worldwide through a number of mergers and acquisitions (M&A) with IC companies at home and abroad; it has thereby established an initial ecosystem for promoting the IC industry in China. This study uses the case of Tsinghua Unigroup as the research object and considers the following questions: (1) How did Tsinghua Unigroup build the IC industry ecosystem through a series of M&A? (2) What are the important roles played by Tsinghua Unigroup's M&A in China's IC industry ecosystem? (3) Considering the aim of late-developing countries to catch up in industrial technology, what is the significance of Tsinghua Unigroup's case?

Theoretical and Literature Review
Through M&A behaviours, many enterprises in late-developing countries have not only bridged the gap in technological innovation, but also have further played technological catch-up, built their own industrial ecosystems, and achieved international competitiveness. Although the literature has reported on related issues, such as technological catch-up and cross-border M&A, it still lacks sufficient theoretical explanatory power for the new phenomenon in which enterprises in late-developing countries build and develop industrial ecosystems in the form of M&A.

The Theory of Technological Catch-Up for Late-Developing National Enterprises
Current theories of technological catch-up in late-developing enterprises are based mainly on Hobday's (1995) OEM-ODM-OBM (original equipment manufacturer-original brand manufacturer-original design manufacturer) reverse product life cycle curve model [1]. Kim (1980Kim ( , 1997 proposed the representative three-stage introduction-digestion-improvement model [2,3]. Subcontracting and OEM mechanisms play the role of a training school in the process of technological catch-up for late-developing enterprises (Perez & Soete, 1988;Hobday, 1995) [3,4] by enabling these firms to overcome barriers to entry and absorb design and manufacturing technologies. Customers need to promote the pace of learning, leading late-developing enterprises to focus on technology digestion, adaptation, and innovation. Unlike those leading the way in research and development (R&D) and design, latecomers gradually improve the manufacturing process through incremental product innovation. With continuous catch-up efforts, numerous late-developing enterprises begin to acquire product design capability, supporting their evolution from an OEM system to an ODM system (Hobday, 1995;Cho & Lee, 2003) [1,5].
However, because of the weak R&D capacities and the low visibility of late-developing enterprises, they tend to continue to rely on hybrid catch-up through growth based on imitation and incremental innovation (Hobday, 1995;Mathews, 2002;Dutrenit, 2004) [1,6,7]. To overcome the problems of the OEM-ODM system, some enterprises begin to increase their R&D investment and adopt OBM to improve their brand image. As these late adopters approach the technological frontier, they begin to establish strategic partnerships with the world's leading companies to acquire more advanced technologies (Hobday, 1995(Hobday, , 2005Mathews & Cho, 1999) [1,8,9]. Kim (1980Kim ( , 1997 believed that the innovation process of late-developing countries was fundamentally different from that of developed countries [2,3]. He proposed a three-stage model to describe the process experienced by developing countries from technology introduction to digestion and absorption and, ultimately, to improvement (Kim, 1980) [2]. Based on Kim's (1980) model, Lee et al. (1988) further proposed that in the early stage of technological catch-up, the speed of product innovation was high and that of technological innovation was low. In the transition phase, the market buyer dominates the design, while the supplier focuses on the specific technology. In the third stage, the product design matures, and the competition mainly focuses on process improvement [10]. Kim and Lee (1987), Kim (1997), and others have also clearly identified catch-up patterns for different technical characteristics. They found that product innovation was most important for catch-up in small batch products, such as those produced by large shipbuilders and machine makers. In mass production (such as electronics and car production), hybrid technological innovation and product development capabilities are important [3,11]. Later, Lee and Lim (2001) extended these models and proposed a possible jump in the technological catch-up phase for late-developing enterprises. In their opinion, late-developing enterprises do not simply follow the technological development path of developed countries, but may skip certain stages or even create their own unique path [12].
At present, research on the IC industry's technological catch-up is mainly based on the above two models. For example, Dezhi Chen, Xiangtang Chen, and Guoheng Yang (2005) found that the South Korean semiconductor industry is undergoing a process of technology introduction, digestion, and innovation, and the Taiwan semiconductor industry is gradually realising an OEM-ODM-OBM technological catch-up growth path [13]. However, these theories focus on the technical ability of backward enterprises to engage in progressive accumulation processes, and they give insufficient attention to overseas acquisitions and other ways in which firms might engage in technological catch-up (Chang et al., 2006) [14]. In the above two models, enterprises in developing and developed countries hold a completely unequal status, and only through technology transfer, joint ventures, and OEMs can they approach the technology held by the multinational enterprise and slowly climb the ladder from OEM to ODM to OBM.
A literature review that is focused on the development of international M&A identifies challenges to the technological catch-up model and framework. Many scholars take the perspective of enterprise internationalisation, and representative theories have been offered by Mathews (2006), who introduced the linkage-leverage-learning model [15], and Luo and Tung (2007), who suggested the springboard perspective [16]. Mathews believed that Dragon multinationals have many common innovations, such as engaging in rapid internationalisation, accelerating the process through organisational change rather than technological change, and establishing a dominant position in the international market through strategic change. Mathews summarised the challenge of multinational enterprises as the repeated application of the connection-leveraged use-learning process, which is necessary to overcome the disadvantage of earliness and to establish a strong competitive position in the global market. Luo and Tung (2007) tried to describe the internationalisation behaviour of emerging market enterprises from the springboard perspective. They argued that backward enterprises use international expansion as a springboard to engage in a series of aggressive and adventurous actions on the global stage, purchasing key assets or mature multinationals to make up for their lack of competitiveness and to overcome the disadvantages of backwardness. In a sense, this effort is systematic and requires a grand plan and an intentional design with both recursive and revolving characteristics.

Industrial Ecosystem Theory
The industrial ecosystem (IE) is the new paradigm of innovation ecosystem development; in particular, it refers to firms connecting through industrial agglomeration and influencing each other to constitute a network system, sharing information between different participants, circulating resources, and promoting the sustainable development of the IE.
The existing research is related to the connotation, main body, structure, and characteristics of IEs. For example, Moore (1996) believed that the IE was centred on enterprises, particularly enterprises with core capabilities [17]. Korhonen (2001) noted that the IE has the characteristics of circularity, diversity, gradualism, and regionalism [18].  believed that the measures taken by enterprises will affect the health of the ecosystem to varying degrees, which in turn will affect the performance and behaviour of enterprises [19]. Hearn and Pace (2006) focused on frontier development and technological innovation in the creative industry and showed how enterprises continuously create value through the ecosystem [20]. Iansiti and Richards (2006) noted that platform providers play a key role in the ecosystem [21]. Adner (2006Adner ( , 2010 believed that enterprise innovation is often not completed independently by a single enterprise, but rather created through complementary cooperation with a series of partners to establish an ecosystem strategy [22,23]. There have been many studies on innovation ecosystems in China. Ling Lu (1996) proposed the enterprise ecology theory, defining enterprise ecology as the study of the relationship between the enterprise and its environment; proposed the "enterprise ecological chain", "enterprise ecological network", and "enterprise ecological countermeasures" concepts; and further discussed the relationship between enterprise management and enterprise ecology from the ecology viewpoint [24]. Xiangju Li and Yongfei Zhan (2008) believed that the essential function of an innovation ecosystem was to integrate knowledge to complete innovation subjects and proposed the concept of an innovation ecosystem management matrix [25]. Yuhui lv (2011) argued that enterprise technical innovation forms a dynamic ecosystem, which is composed of the sum of the institutions, systems, and environmental elements that implement and influence technology innovation activities, and which, therefore, has some similarities with the natural ecosystem [26]. On this basis, Chunlai Wu et al. (2013) believed that the industrial technology innovation ecosystem was interwoven with different industrial chains and formed an open, multidimensional, and complex network structure [27].
The IE perspective has influenced the development of industrial organisation theory and enterprise strategic management. From this research perspective, researchers mainly focus on the coordination and evolution processes between internal network entities in the industry, which are characterised by cooperation and competition [28,29]. Jacobides et al. (2006Jacobides et al. ( , 2007 organised the research into different levels of bilateral relations, industrial background, and even the entire IE to reflect the interaction process between enterprises [30,31]. At present, an increasing number of researchers believe that competition between enterprises has become competition between ecosystems [23,[32][33][34]. Jinxi Wu (2014) introduced the importance of the innovation ecosystem, taking the case of Nokia's decline and discussing its essence, connotation, characteristics, and policy implications in depth [35]. The advantage of an enterprise depends on its position in the ecosystem and the ability level of the total ecosystem [36][37][38][39]. However, the study of IEs has not yet matured, as there are major differences between IEs, such as mature IEs versus emerging IEs and IEs of developing countries versus those of developed countries. Further exploration of these and other aspects of IEs is needed in the future [40][41][42].

Brief Literature Review
Although the theory of technological catch-up for late-developing national enterprises provides insightful explanations for the rise of late-stage enterprises, most of these explanations only focus on the stage of technological catch-up, ignoring the construction of IEs in this process. Because the position of the enterprise in the IE and the intention and role of M&A are overlooked, it is difficult for these theories to systematically explain the process of catching up with developed countries.
In IE theory, the current research pays more attention to the existing industrial ecology and to the interactions between different subjects, ignoring the establishment, development, and improvement of IEs in time series.
On the basis if the theory of technological catch-up in late-stage countries, this study focuses on the case of Tsinghua Unigroup International's M&A, considering how developing countries' enterprises can achieve the goal of leap-forward development through the layout of IEs, thus exploring new discoveries.

Basic Information
In recent decades, Europe, the United States, Japan, and South Korea have dominated the global IC industry. Europe, the United States, Japan, and South Korea represented 9%, 50%, 11%, and 17%, respectively, of the global IC industry output value share in 2015, while mainland China accounted for only 4% (Figure 1). China is currently the world's largest consumer of semiconductors, accounting for one-third of the world's demand for chips, but imports account for more than 90% of its chip consumption. According to statistics from China's semiconductor association, since 2013, China's imports of ICs have been valued at more than $200 billion (US) for four consecutive years; China's imports of ICs for 2016 were $227 billion, and it had exports of just $61 billion ( Figure 2). In 2016, sales exceeded $430 billion, an increase of approximately 20% over the same period the previous year. It is estimated that the domestic IC industry will grow by approximately 25% in China in 2018 under the simultaneous and coordinated development of three industries: design, manufacturing, and sealing and testing. In general, China's IC industry is developing rapidly at present, but its domestic chip self-sufficiency rate is seriously inadequate, and there remains a relatively large gap compared with Europe, the United States, Japan, and South Korea. the simultaneous and coordinated development of three industries: design, manufacturing, and sealing and testing. In general, China's IC industry is developing rapidly at present, but its domestic chip self-sufficiency rate is seriously inadequate, and there remains a relatively large gap compared with Europe, the United States, Japan, and South Korea.  Source: China Semiconductor Industry Association.

IC Industry Ecosystem
The IC industry can be subdivided into the upstream chip design industry, the midstream chip manufacturing industry, and the downstream chip packaging and testing industry, which together constitute the core of the value chain ( Figure 3). Of these, the chip design industry has technologyintensive attributes, chip manufacturing is capital and technology intensive, and the encapsulation the simultaneous and coordinated development of three industries: design, manufacturing, and sealing and testing. In general, China's IC industry is developing rapidly at present, but its domestic chip self-sufficiency rate is seriously inadequate, and there remains a relatively large gap compared with Europe, the United States, Japan, and South Korea.  Source: China Semiconductor Industry Association.

IC Industry Ecosystem
The IC industry can be subdivided into the upstream chip design industry, the midstream chip manufacturing industry, and the downstream chip packaging and testing industry, which together constitute the core of the value chain ( Figure 3). Of these, the chip design industry has technologyintensive attributes, chip manufacturing is capital and technology intensive, and the encapsulation

IC Industry Ecosystem
The IC industry can be subdivided into the upstream chip design industry, the midstream chip manufacturing industry, and the downstream chip packaging and testing industry, which together constitute the core of the value chain ( Figure 3). Of these, the chip design industry has technology-intensive attributes, chip manufacturing is capital and technology intensive, and the encapsulation testing industry tends to be more labour and capital intensive. Much of the IC industry takes advantage of an international division of labour, such as Qualcomm, Broadcom, AMD, Intel, and Samsung, which are European, US, and South Korean enterprises, respectively, using a technology monopoly to create a lucrative business focused on the chip design process. Domestic enterprises mainly focus on wafer manufacturing (primarily OEM manufacturing), packaging, testing, and other relatively low-profit links; the competition among this group is fierce.

Chip Design Industry
Chip design is the core part of the IC industry. The R&D cost of this link is high, with high technical barriers. Because it does not require investment in the production line, it does not have high capital requirements, but does require a high number of skilled employees. The key factors needed to be competitive in the market are product creativity, performance, quality, and service. Qualcomm, Broadcom, and Mediatek of Taiwan have been leading the pack in chip design. China's domestic chip design industry has developed rapidly in recent years, and Huawei HiSilicon and Tsinghua Unigroup Spreadtrum have ranked among the top 10 globally (Table 1). However, domestic enterprises generally lack independent intellectual property rights, and there are still bottlenecks in high-end chip design.
Qualcomm, Broadcom, and AMD, from the United States, have maintained a high market share in the global rankings of chip design manufacturers in recent years. Driven by the international fabless model, the number of China's domestic chip design companies has reached more than 600, but the overall scale is relatively small, with sales accounting for only two-thirds and one-fifth of those of Taiwan and the United States, respectively. China's chip design industry is still in its infancy, with less than 10% of the local supply, and high-value chips are almost entirely imported. Because local Chinese companies are faced with problems such as a weak R&D foundation and a lack of human resources, the early investments and risks of chip design enterprises are higher than those in other industries. In recent years, international M&A have gradually become the main choice for developing the chip design industry for latecomers in China; the acquisitions of Spreadtrum and RDA are typical examples.

Chip Manufacturing
Chip manufacturing (mainly wafer manufacturing) processes include lithography, etching, oxidation, deposition, diffusion, and flatting. Highly integrated semiconductor device fabrication is a very sophisticated process. So far, the state-of-the-art technology node involves intricate generation and manoeuvring of extreme ultra-violet (EUV), which requires high-end technical equipment. Much of the IC industry takes advantage of an international division of labour, such as Qualcomm, Broadcom, AMD, Intel, and Samsung, which are European, US, and South Korean enterprises, respectively, using a technology monopoly to create a lucrative business focused on the chip design process. Domestic enterprises mainly focus on wafer manufacturing (primarily OEM manufacturing), packaging, testing, and other relatively low-profit links; the competition among this group is fierce.

Chip Design Industry
Chip design is the core part of the IC industry. The R&D cost of this link is high, with high technical barriers. Because it does not require investment in the production line, it does not have high capital requirements, but does require a high number of skilled employees. The key factors needed to be competitive in the market are product creativity, performance, quality, and service. Qualcomm, Broadcom, and Mediatek of Taiwan have been leading the pack in chip design. China's domestic chip design industry has developed rapidly in recent years, and Huawei HiSilicon and Tsinghua Unigroup Spreadtrum have ranked among the top 10 globally (Table 1). However, domestic enterprises generally lack independent intellectual property rights, and there are still bottlenecks in high-end chip design.
Qualcomm, Broadcom, and AMD, from the United States, have maintained a high market share in the global rankings of chip design manufacturers in recent years. Driven by the international fabless model, the number of China's domestic chip design companies has reached more than 600, but the overall scale is relatively small, with sales accounting for only two-thirds and one-fifth of those of Taiwan and the United States, respectively. China's chip design industry is still in its infancy, with less than 10% of the local supply, and high-value chips are almost entirely imported. Because local Chinese companies are faced with problems such as a weak R&D foundation and a lack of human resources, the early investments and risks of chip design enterprises are higher than those in other industries. In recent years, international M&A have gradually become the main choice for developing the chip design industry for latecomers in China; the acquisitions of Spreadtrum and RDA are typical examples. Source: authoritative and official information on the Internet.

Chip Manufacturing
Chip manufacturing (mainly wafer manufacturing) processes include lithography, etching, oxidation, deposition, diffusion, and flatting. Highly integrated semiconductor device fabrication is a very sophisticated process. So far, the state-of-the-art technology node involves intricate generation and manoeuvring of extreme ultra-violet (EUV), which requires high-end technical equipment. Meanwhile, the development and manufacturing of such equipment is very costly, often requiring billions of dollars of investment. Accordingly, the advanced semiconductor device fabrication industry builds capital barriers that are hard to overcome. For example, in recent years, the scale of capital spending for TSMC reached up to $10 billion a year. At the same time, this industry has high technical barriers: the chip manufacturing process has a long learning curve, and as processing precision improves, R&D costs also increase. At present, wafer foundries have formed an oligopolistic competition pattern because they have high requirements for technology and capital, and the industry threshold is high.
In 2016, the world's number one wafer foundry enterprise, TSMC, had sales reaching $29.488 billion, up 10.97% from a year earlier, after two years with a monopoly and a global market share of nearly 60%, which is five times larger than that of the second-ranked Global Foundries and ten times that of the fourth-ranked Chinese SMIC wafer foundry enterprises. In 2016, the total operating revenue of the top ten wafer OEM enterprises worldwide was $47.754 billion, an increase of 11.49% over 2015, accounting for 94.68% of total annual wafer OEM sales and showing an obvious oligopolistic pattern. China's chip manufacturing industry has experienced a compound growth rate of 15% over the past 10 years, and China's domestic enterprises have seen rapid growth in terms of production scale, but in terms of technical strength, there is still a significant gap between China and other advanced enterprises worldwide. At the same time, overseas firms, including those in Taiwan, have restricted the investment of their chip manufacturers in mainland China. Therefore, in terms of advanced chip manufacturing technology, mainland chip manufacturing is experiencing a talent shortage and a weak industry foundation; in mainland China, only SMIC and Huahong Grace are among the top 10 in the industry.

Chip Sealing and Testing Industry
The chip packaging test link is the last step of the IC industry chain. In this step, the silicon wafer is connected with wires to the pins of its packaging devices to connect with other devices. To be specific, the packaging device is the shell that encapsulates the semiconductor IC. The technical threshold of this link is relatively low, and it is labour intensive. Encapsulation testing enterprises are mainly in OEM mode, the scale effect is obvious, the service customer is mainly the upstream chip design and manufacturing enterprises, and high-quality customer resources are necessary; therefore, the expansion of market share is vital for promoting the operating performance of encapsulation testing enterprises.
The countries and regions engaged in semiconductor packaging testing worldwide are mainly Taiwan, Malaysia, mainland China, the Philippines, South Korea, and Singapore. Because of the comparative advantage of labour cost, China's packaging and testing industry developed most quickly in the IC industry chain and has the highest industry maturity. Domestic sealing and testing enterprises have gradually developed to offer high-end sealing and testing services, and their technical strength and scale have been further improved through extensive M&A. Currently, the mainstream of chip packaging technology is still in the era of surface packaging; 3D lamination, 3D through-silicon vias (TSVs), and other 3D packaging technologies are still under development. International IC packaging technology has adopted ball grid array (BGA) and chip scale packaging (CSP) as their mainstream technology routes, whereas local packaging testing manufacturers in China mainly use the dual in-line package (DIP), small out-line package (SOP), and quad flat package (QFP). With the development of the domestic component of packaging enterprises, domestic enterprises have obtained advanced packaging technologies (copper technology, wafer level packaging, 3D stack size) and have already begun to batch orders, improve the domestic technology level, and gradually achieve the international mainstream level. Domestic enterprises are also actively seeking overseas M&A to further enhance competitiveness in global markets, such as Jiangsu Changjiang Electronics Technology (JCET) in Singapore acquiring STATS ChipPAC, raising it in the industry rankings from six to four worldwide and increasing its global market share from 3.9% to 10%.

Research Methods
This study primarily adopted the case study method. Relative to other research methods, the case study method adopts a detailed description of the case and understanding of the system, allowing a dynamic process of interaction with the research context to obtain a more comprehensive overall point of view. First, a case study is more appropriate for studying a "how" problem using induction [43].
The key problem addressed in this study was how the acquisition behaviour of Tsinghua Unigroup affects its IC industry ecosystem and helps it achieve technological catch-up. Second, analytic generalisation from case to theory [44] is more suitable for exploring and explaining this phenomenon. Because the relationship between international M&A and the IC industry ecosystem is complex and because relevant factors and processes are not completely clear, it may have been difficult to solve the above research problems with quantitative methods. Third, the case study method is highly suitable for problems of theoretical and practical significance, especially those pertaining to overall and long-term organisational strategy [44].
In this study, Tsinghua Unigroup, a representative leader in China's IC industry, was selected as the case study object. Tsinghua Unigroup has engaged in a series of international M&A behaviours in recent years and has significantly improved the environment for China's IC industry ecosystem. Evolving from a general enterprise to a top domestic enterprise, the growth of Tsinghua Unigroup exemplifies a very successful experience, especially in the ecosystem of the IC industry, which is of great importance at both the theoretical and the practical levels when considering enterprises in a late-developing country.
Following the relevant literature review and preliminary data collection, the basic structure of this study was as follows. First, it was based on an investigation into the context and problems of China's IC industry from the three aspects of chip design, manufacture, and testing, and discussed the developmental path of the IC industry ecosystem. Second, it focused on analysing the contribution of the international M&A of Tsinghuaof Tsinghua Unigroup to China's IC industry and its role. Third, the paper discussed and summarised insights from the case of Tsinghua Unigroup to apply to the technological catch-up of enterprises in late-developing countries, and thereby enriched the theories of innovation ecosystems, technological learning, and technological catch-up.

Basic Information
Tsinghua Unigroup was established by Tsinghua University in 1988 and was officially formed in 1993. Over the past 10 years, Tsinghua Unigroup has taken advantage of global trends in the development of the information industry and its own advantageous features to gradually establish itself in the IC industry as a leading firm in memory chips, memory manufacturing, mobile Internet, cloud computing, and cloud services, following the information industry's direction in the development of its core areas of focus. In 2017, its operating revenue reached 39.071 billion yuan, reflecting a year-on-year increase of 41%. As the core force of independent innovation in China's IC industry, Tsinghua Unigroup has applied for more than 10,000 patents so far. The patents cover the entire industrial chain, and the number of effective invention patents is at the forefront, laying the foundation for China's information industry strategy.
To build an ecosystem for the IC industry and to narrow the gap with IC firms in Europe and the United States, Tsinghua Unigroup used the 2013 acquisition of Spreadtrum to enter into the field of integrated circuits, with "international M&A + independent innovation" driving the process, and its aim being to become the core strength of the domestic IC industry. At present, Tsinghua Unigroup is China's largest comprehensive semiconductor company, the world's third-largest mobile phone chip design company, and the largest firm in enterprise IT services in China and second in the world; it engages in strategic cooperation with Intel, HP, Western Data, and other global IT giants.

The Course of Tsinghua Unigroup's International M&A and the Construction of its IC Industry Ecosystem
By organising the M&A cases of Tsinghua Unigroup (Table 2), we can obtain a general understanding of its growth path in establishing its domestic IC industry ecosystem. First, through a series of international M&A, Tsinghua Unigroup attempted to compensate for gaps in the domestic IC industry in chip design and manufacturing, especially in terms of promoting the international competitiveness of its memory chips and shortening the cycle of industrial upgrading. Second, M&A allowed it to integrate domestic and foreign resources, to invest in building an R&D and manufacturing base for memory chips, and to open up and build a complete industrial chain from design to manufacturing to sealing and testing. In the future, Tsinghua Unigroup will increase its investment in product R&D, its localisation of technology, and its clustering of manufacturing to focus on building a system for the storage chip industry (Table 3).

Chip Design Industry
The Tsinghua Unigroup bought Spreadtrum and RDA, two of the top three chip design companies in China, and thereby became one of the most influential performers in the domestic market. In September 2014, Intel invested 9 billion yuan in Tsinghua Unigroup's Spreadtrum and RDA, and the two sides planned to jointly develop mobile phone solutions based on Intel's architecture and communications technology. Through the acquisition of Spreadtrum and RDA, Tsinghua Unigroup received 10 billion yuan of investment from the IC fund and 20 billion yuan in loans from the National Development Bank.
In terms of its positioning in the IC industry, Tsinghua Unigroup started with mobile communication chip layout and design, which not only stabilised the design process of mobile communications chips, but also enhanced the global market position of Chinese enterprises in that field through effective cooperation between RDA and Spreadtrum on technology and products. These first acquisitions represent milestones for China's IC industry. However, Tsinghua Unigroup's high-end chip design had not reached the international first-class level.

Chip Manufacturing
After the acquisition of Spreadtrum and RDA, Tsinghua Unigroup began to engage in layout chip manufacturing. With the development and popularisation of the Internet, cloud computing, and big data, the storage chip has taken an increasingly prominent role as an important piece of infrastructure. Memory chips can bring scale economy benefits and advanced manufacturing technology to the IC industry. According to statistics, memory chips account for more than 25% of the overall chip market and will reach approximately 45% in the future. As a result, Tsinghua Unigroup has focused its manufacturing footprint on memory chips. China entered the memory chip market late, developed slowly, and lacked core technology. Currently, several companies such as Samsung, Hynix, and Intel hold a practical monopoly, with over 90% of the global storage market.
Memory chips represent a heavyweight technology + manufacturing field. At one time, China had no real capacity to produce memory chips. In 2015, Tsinghua Unigroup became the shareholder of Hewlett-Packard Co.'s H3C company, Western Digital, and SanDisk. Western Digital is competitive with Seagate in mechanical hard drives, but relatively weak in the emerging field of solid state disk (SSD). SanDisk, owned by Western Digital, is the world's third-largest producer of flash memory, with 27 years of rich experience in the areas of solid-state hard drives, memory cards, and Udisks. By acquiring a 15% stake in Western Digital, Tsinghua Unigroup began to break into the storage chip market, with a further bid from Western Digital to acquire flash.
The acquisitions of H3C, Western Digital, and SanDisk aimed at breaking the foreign technology monopoly, allowing Tsinghua Unigroup to produce memory. However, after the failure to acquire Micron Technologies, Tsinghua Unigroup began to integrate resources with domestic enterprises and local governments to construct a manufacturing base and perfect memory chip manufacturing. In July 2016, Tsinghua Unigroup acquired a majority stake in Wuhan Xinxin and registered and established the new Changjiang Storage, which turned Wuhan Xinxin into its wholly owned subsidiary. Tsinghua Unigroup, meanwhile, cooperating with local government, invested nearly $100 billion successively in Wuhan, Nanjing, Chengdu, and other areas to build a memory chip and memory manufacturing factory, shifting from M&A to the independent construction of its manufacturing base.

Chip Sealing and Testing Industry
Taiwan's chip sealing and testing industry has always played a leading role worldwide. Because of this, Tsinghua Unigroup aimed to absorb Taiwan's technology and talent while expanding the chip sealing and testing industry. In October 2015, Tsinghua Unigroup invested approximately US $600 million in Licheng Technology for an approximate 25% stake, becoming its largest legal shareholder. Licheng Technology is in the leading position in memory chip sealing and testing in Taiwan. It is also the largest storage sealing and testing factory in the world. At that point, Tsinghua Unigroup had constructed the complete industry ecology of memory chips from design to package testing. At the end of the same year, Tsinghua Unigroup became the first-and second-largest shareholder of SPIL and ChipMOS, respectively, at a total price of 13.5 billion yuan. As the third-largest sealing and testing factory in the world, SPIL follows ASE in the Taiwan market. ChipMos is similar to SPIL and ranks second in the world in terms of IC packaging and the testing capacity of LCD drivers.

Case Analysis of Tsinghua Unigroup
The sound development of the IC industry requires a proper industrial environment and ecosystem. One of the key problems in China's semiconductor industry is that there are shortages in the industrial chain. A large number of supporting products, including materials, are imported, and local enterprises cannot provide effective support. Through a series of international M&A, Tsinghua Unigroup initially constructed an IC industry ecosystem and effectively enhanced the international competitiveness of China's IC industry (Figure 4).

Case Analysis of Tsinghua Unigroup
The sound development of the IC industry requires a proper industrial environment and ecosystem. One of the key problems in China's semiconductor industry is that there are shortages in the industrial chain. A large number of supporting products, including materials, are imported, and local enterprises cannot provide effective support. Through a series of international M&A, Tsinghua Unigroup initially constructed an IC industry ecosystem and effectively enhanced the international competitiveness of China's IC industry (Figure 4).  Research findings show that company strategy and a sense of mission were preconditions for the development of Tsinghua Unigroup. The strategic positioning of the company is the core issue for business management. As early as 2012, Tsinghua Unigroup established the strategic goal of "building a world-class high-tech enterprise". A year later, through international cooperation, Tsinghua Unigroup quickly completed the acquisition of Spreadtrum and RDA.
In addition, entrepreneurship has had an irreplaceable influence on the strategic positioning of the company. As an important and intangible production factor, it is one of the sources of an enterprise's core competitiveness. Tsinghua Unigroup's international acquisitions cannot be separated from Chairman Zhao Weiguo's efforts. Since 2009, Tsinghua Unigroup's chairman, Zhao Weiguo, has spent nearly $6 billion on the acquisition of Spreadtrum and RDA and has led Tsinghua Unigroup to remarkable achievements in becoming a Chinese communication company with a global influence. Tsinghua Unigroup has effectively integrated talent, technology, and capital to form an IC industry chain, becoming a global giant in the field of integrated circuits and the mobile Internet. The future strategic direction of Tsinghua Unigroup is to build a world-class enterprise group in China's high-tech field.
6.2. Domestic M&A Can Generate Scale Effects, Which is the Foundation for Conducting International M&A.
Tsinghua Unigroup bought Spreadtrum and RDA, two of the top three chip design companies in China, and became one of the most influential performers in the domestic market and the third-largest mobile phone baseband chip supplier in the world, following Qualcomm and Mediatek. In 2016, Tsinghua Unigroup integrated the acquired Spreadtrum and RDA into UNISOC, committed to the integration of mobile chip technology and the improvement of the firm's independent R&D capacity. Based on the powerful advantages of low-end chips (2G/3G), UNISOC has been catching up in 4G, which is essentially the same speed offered by Qualcomm and Mediatek.
Initially, Tsinghua Unigroup's independent international M&A produced positive results, attracting national attention. In 2014, when the outline for national IC industry development and promotion was released, a national investment fund for the IC industry was established. In February 2015, the national IC industry investment fund invested 10 billion yuan in the chip business of Tsinghua Unigroup, the first large-scale investment since the fund's establishment. At that time, Tsinghua Unigroup's chip business primarily included Spreadtrum and RDA. Because of its achievements through domestic M&A, Tsinghua Unigroup gained the support of the government and the public and became an influential enterprise in the IC industry, which was the necessary preparation to conduct international M&A.
6.3. International M&A Helped Tsinghua Unigroup to Realise the "Leapfrog Effect", During Which Technology Localisation Played a Vital Role.
To a certain extent, international M&A help enterprises quickly obtain the advanced technology of developed countries. However, gaining independent innovation ability and ascending to international competitiveness requires the enterprise to absorb, integrate, and optimise the technology gained through M&A.
According to statistics, UNISOC has more than 5000 employees (more than 90% of whom are R&D personnel) and 16 technology R&D centres worldwide. After a series of international M&A focused on chip manufacturing, Tsinghua Unigroup's industry is entering a new era of "inside and outside improvement"; namely, it is focusing on acquired technology localisation and attempting to explore the technology path to improve the ability to engage in independent innovation. For the manufacturing of memory chips, Tsinghua Unigroup invested in Wuhan, Hubei Province, to build a world-class semiconductor base to break through weaknesses in the Chinese IC industry. This investment also had a significant impact. The establishment of Changjiang Storage and the construction of a 12-inch chip project have successfully led to the concentration of the upstream and downstream semiconductor industries. China currently has more than 20 IC design companies, 10 global semiconductor equipment suppliers, more than 10 raw materials production enterprises, and more than 10 chemical suppliers, forming a good IE. This is a major step forward in an IE.
The Chinese government provides a favourable policy environment for the development of the IC industry, and Tsinghua Unigroup is also actively responding to the national "Five-Year Strategic Emerging Industry Development Planning" and "independent innovation, safety control" of the development strategy of the IC. The powerful national IC industry investment and financing platform provides Tsinghua Unigroup with an important source of hundreds of millions of dollars in funds for international M&A. When the industry is in the technology reserve and accumulation stage, in addition to relying on large enterprises, a large number of key technology R&D activities guided by national will or government planning will assume heavy responsibilities.
Generally, the development of China's IC industry is indispensable to the construction of an IE; the key is to rely on an enterprise, such as Tsinghua Unigroup, to serve as the backbone for enterprise progress and success. Chinese enterprises were small in scale and weak, but Tsinghua Unigroup was able to independently use M&A along the IC industry chain, and after the mergers, it conducted a series of integrations to promote the healthy development of the of the IC industry ecosystem.

Conclusions and Discussion
By studying the merger of Tsinghua Unigroup, we found that the rise of IC industry M&A is a general trend in economic restructuring. Tsinghua Unigroup, as the forerunner of the IC industry in mainland China, has also started a new wave of M&A in the domestic IC industry. The growing IC industry in China will have a profound impact on the global IC industry. This work analysed the process and experience behind Tsinghua Unigroup's capital operations and explored how domestic and foreign enterprises were acquired in succession and how their strength increased so that the Chinese IC industry's ecosystem could grow stronger and healthier. At the same time, it provided a beneficial reference for late-developing countries in the development of the IC industry.
In terms of theory, based on a summary of the OEM-ODM-OBM and introduction-digestionimprovement models, it is believed that the current increased international M&A is playing an important role in the catch-up of enterprises in developing countries. However, this catch-up is not a process of accumulating progressive technological capabilities, resembling a step-like climb, but instead has leapfrogging characteristics. This study also focused on the development of IEs as enterprises catch up in post-developed countries. The case of the Tsinghua Unigroup shows that the process of catching up for enterprises in emerging countries is inseparable from the construction of their IE. The establishment and improvement of IEs are fundamental if a technical enterprise is to succeed in the international market.
In practice, for enterprises in late-developing countries, it requires too much time and cost to break through the monopoly held by developed countries based completely on independent R&D. Therefore, Tsinghua Unigroup acquires technology and related companies through international M&A and then realises the transfer of technology localisation, which can accelerate the process of technology improvement. It is much easier for firms to use international M&A to become stronger, to have an equal right to speak, and to engage in independent innovation on the basis of equal cooperation with international giants. Companies in post-commercial countries also need to focus attention on the integration of technologies after international M&A. If firms cannot use the technology acquired from M&A, it greatly increases the difficulty of catching up with technology.
Because of the restrictions of international politics, there have been some M&A failures for Tsinghua Unigroup. However, in building the domestic IC industry ecosystem, Tsinghua Unigroup has made important contributions and has provided lessons to be learned. In addition to entering into IC design, manufacturing, packaging, and testing to develop an IC industry ecosystem, it is necessary not only to follow up with supporting equipment and materials, but also to gradually improve personnel training and the industrial environment.
In the construction of the domestic IC industry ecosystem, especially in the context of national policies that fully support the domestication of semiconductor chips, the government can lead the joint IC Industry Association and leading companies to create an open innovation platform and actively attract firms. The addition of resources includes scientific research institutions, IC industry materials, equipment suppliers, system service providers, multinational companies, mobile phones, and automotive electronics, as well as other end-consumer manufacturers and venture capital institutions, among others. This is a large problem in the IE. In such an ecosystem, core enterprises, supporting enterprises for raw materials and equipment, scientific research institutions, financial systems, personnel training systems, downstream and end-user needs, government policy support, and sound international political and economic systems are indispensable. Through its M&A activities and with the help of the government, Tsinghua Unigroup is encouraging joint innovation on the basis of open management, realising the sharing of knowledge and technology, and creating an IC industry innovation ecosystem.