Tsinghua Unigroup Ltd splashes cash in attempt to move Qualcomm out of the way
Chinese business giant Tsinghua Unigroup wants to pump 300 billion yuan (£31bn) into chip production over the next five years, the conglomerate’s chairman announced today.
The group is reportedly in talks with a US chipmaker, with a deal that may come as soon as the end of November, according to Reuters.
Tsinghua Unigroup Ltd, which is 51 percent owned by Tsinghua Holdings and 49 percent owned by Beijing Jiankun Investment Group, wants to become the world’s third-largest chipmaker, Chairman Zhao Weiguo told the agency in an interview.
“If you can’t be the top-three giant, it will be very hard to develop your business in the chip industry,” he said.
“The next five years is key… There is an enormous market out there,” Reuters cited him as saying.It was last week when the Wall Street Journal reported that Tsinghua Unigroup will set up a new subsidiary, Tongfang Guoxin Electronics (TGE), which has a filing on the Shenzhen stock exchange, to oversee the research and acquisition of companies needed to build advanced chips.
TGE’s filing said it hoped to raise $12.6bn (£8.34bn) in a private placement, with further funds coming from both TU and investment company of TU chairman Zhao Weiguo.
The move may provide major Chinese firms such as Lenovo, Huawei and ZTE with the option to buy home-made chips for their devices, rather than using those from American companies.
There have been several high-profile clashes between the notoriously private Chinese government and foreign manufacturers, as the former looks to encourage competition from native firms.
Most notably, Qualcomm was hit with an investigation by Chinese authorities for well over a year following claims that the company reportedly charged higher prices to Chinese companies than in other countries, claims which could land the company with a $1bn fine.
The distrust was also working the other way, as earlier this year the US government considered imposing economic sanctions on China in retaliation for its suspected involvement in cyber-attacks intended to benefit the Chinese economy.
However the two companies later agreed to work together following high-profile talks between US President Barack Obama and his Chinese counterpart, President Xi Jingping.
In May, Hewlett-Packard confirmed it would sell a majority stake of its Chinese hardware business to a Tsinghua Holdings subsidiary for $2.3 billion (£1.5bn).
Unisplendour will acquire 51 percent of HP’s H3C Technologies, valuing the total business at $4.5 billion (£2.9bn).The new H3C will be providing servers, storage and networking hardware in China.