China’s largest chipmaker secures US$22bn in funds

From : Taipei Times



Tsinghua Unigroup Ltd (清華紫光) has clinched as much as 150 billion yuan (US$22 billion) of financing from two Chinese government-backed investors, amassing a pool of funds to pursue acquisitions and build a world-class semiconductor industry.

The state-linked chipmaker is to receive 100 billion yuan from China Development Bank (國家開發銀行), a policy lender overseen by the Cabinet, in the years until 2020.

It is to get another 50 billion yuan from a national chip fund set up in 2014 to drive advances in domestic semiconductors, Unigroup said in a statement on its Web site.

The company did not describe how the capital would be deployed, but Unigroup has been an aggressive acquirer and capacity-builder, the standard-bearer for an effort to wean China off its reliance on foreign technology.

It is building a US$30 billion memorychip production complex in Nanjing that is to become China’s largest when completed. It is also preparing to expand its memory and storage facilities in Wuhan.

The capital injection “is poised to lend strong support to Unigroup’s rapid expansion in the industry” and “speed the process of technology upgrades and lift our core competitiveness,” the company said in a statement after signing the agreements with the two investors.
China is spending an estimated US$150 billion over 10 years to try to achieve a leading position in semiconductor design and manufacturing, an ambitious plan that US executives and officials have warned could harm US interests.

Unigroup, an affiliate of the business arm of Tsinghua University, has become the largest semiconductor player in a nation dependent on imports for components such as high-performance processors and 3D-NAND chips.

Unigroup and other Tsinghua affiliates have pulled off a number of acquisitions, including of RDA Microelectronics Inc (銳迪科) and Spreadtrum Communications Inc (展訊通信), to beef up their design capability.

They have also signed partnership deals with global players including Western Digital Corp.

However, the merger and acquisition spree has hit a wall of late — Tsinghua was forced to withdraw a planned investment in Western Digital after the deal threatened to invite US government scrutiny, while a Taiwanese acquisition also fell through.

The company’s major business units and affiliates include IC developer Unigroup Guoxin Co (紫光國芯), formed via a series of mergers of state-backed entities, and Changjiang Storage (長江儲存), which was the result of a merger between Unigroup’s own memorychip operations and a government-run factory last year.