This announcement came after the Committee on Foreign Investment in the U.S. (CFIUS) sent a letter notifying Unisplendour that the agency will be reviewing the WD deal. However, the plan between Tsinghua Unigroup and WD to form a joint venture to sell data center storage solutions will continue without interruption.

With Tsinghua Unigroup withdrawing its investment in WD, the terms under which WD can acquire SanDisk have changed as well, reports DRAMeXchange, a division of TrendForce. Under the revised arrangement, each SanDisk share will now be worth US$67.50 in cash plus a 0.2387 share of WD stock. Based on WD’s closing price on February 22, the latest offer is estimated at $78.50 a share. Furthermore, the SanDisk acquisition will have to be voted on at a WD shareholder meeting to be held on March 15.

The ambitious Tsinghua Unigroup has been busily investing in companies along the mid- and downstream of the NAND Flash industry chain. China’s robust capital market and government’s plan to build a domestic semiconductor sector have provided the financial backing that support Tsinghua Unigroup’s M&A activities.

“Tsinghua Unigroup attempted to indirectly obtain NAND Flash manufacturing capability by first becoming WD’s largest shareholder and then having WD to takeover SanDisk,” said Sean Yang, research director at DRAMeXchange.

“However, CIFUS was able to use Exon-Florio Amendment to the Defense Production Act to prevent this from happening. Tsinghua Unigroup will now have to adjust its strategy, and the market will pay close attention to what the Chinese conglomerate will do next in its pursuit of NAND Flash technology.”

Yang added that the Chinese government regards NAND Flash as a critical part of its plan to localize semiconductor production. At the same time, the domestic consumption of this memory is rising rapidly.

According to DRAMeXchange, China’s consumption of NAND Flash for 2015 arrived at US$6.5 billion, or about 28% of the global total. The 2016 projection indicates that China’s share in the worldwide consumption will expand to about a third.

With such impressive growth comes huge opportunities, Chinese semiconductor companies will try to establish a complete NAND Flash chain through various business models or investment ventures.