Catching Up Samsung
In a bid to become China’s first giant in the global semiconductor industry, Tsinghua Unigroup Ltd. has a US$30 billion (35.01 trillion won) investment plan.
Bloomberg Business reported on March 24 that the company will raise funds from local governments and private equity funds in order to compete with foreign giants, like Samsung Electronics.
Unlisted Tsinghua Unigroup runs businesses spanning cloud computing, mobile and semiconductors. Chairman Zhao Weiguo said the company generated US$200 million (233.4 billion won) in profit last year on sales of US$2.1 billion (2.45 trillion won). He is planning to raise as much as US$15 billion (17.51 trillion won) by the end of this year to invest in taking over companies and expanding the production capacity.
“It’s a hard business doing memory, with huge investment, slow returns and high risks,” said Gu Wenjun, chief analyst at iCwise, a Shanghai-based consulting company. “I suggest Unigroup takes it cautiously. Before finding cooperation partners and sources of technology, it should be cautious.”
Zao said the company has ruled out pushing into markets such as processor chips.
Tsinghua bought semiconductor producers, such as RDA Microelectronics Inc. and Spreadtrum Communications Inc., over the years. However, its plan to purchase Micron at US$23 billion (26.84 trillion won) went to pieces. The company also scrapped its plan for a US$3.8 billion (4.43 trillion won) investment in Western Digital Corp. last month because it was worried that the U.S. government would not approve it. Its investments in three Taiwanese chip companies also faced the public opposition in Taiwan.
With its efforts for the business take-over, Tsinghua plans to build a memory plant in China and hire the talent needed to build the business. For now, the focus is on chip design for mobile phones and smart cards before moving into manufacturing.