The acquisition of US-based Integrated Silicon Solution (ISSI) by China's Uphill Investment is expected to run more smoothly after ISSI's Taiwan subsidiary Chingis Technology is taken over by MediaTek, industry observers believe.

ISSI recently disclosed that the company had completed the internal restructuring of its operations in Taiwan. As a result of the restructuring, all of the assets and employees to be divested have been transferred to the subsidiary Chingis Technology. ISSI has also struck a deal with MediaTek Capital to sell Chingis for US$27.1 million. ISSI's sale of Chingis is subject to regulatory approvals in Taiwan, and is expected to close shortly before the closing of ISSI's acquisition by Uphill Investment, the US-based SRAM chip vendor noted.

The Taiwan law would not have allowed ISSI to sell its Taiwan subsidiary to the China firm.

Industry observers believe that MediaTek is doing doing Uphill Investment - a Summitview Capital-led consortium of Chinese investors - a favor, rather than considering the acquisition a strategic move for its business.

In late 2014, MediaTek announced plans to join a China government-led investment fund aiming to boost development of the local IC industry in Shanghai. The fund has also drawn the participation of Semiconductor Manufacturing International (SMIC), which is Chingis' major foundry partner.

The government-led industry investment fund, which MediaTek is investing in, was initiated by the Shanghai city government and Summitview Capital. With the acquisition of Chingis, MediaTek is undoubtedly helping Uphill Investment solve legal problems its ISSI acquisition is facing in Taiwan, the observers said.

ISSI has said that the acquisition of the company by Uphill Investment is expected to close by the end of the calendar third quarter of 2015.