China Chip Boss Targeted By Anti-Graft Probe

Chinese authorities target Zhao Weiguo, former chairman of chip giant Tsinghua Unigroup, for corruption probe amidst industry struggles

China’s corruption regulator has lauched a probe into Zhao Weiguo, former chairman of chip heavyweight Tsinghua Unigroup, the latest in a round of investigative actions affecting major figures in the critical industry.

China’s Central Commission for Discipline Inspection alleged Zhao “took the state-owned company he managed as his private fiefdom”.

It said he had handed profitable businesses to his relatives and friends and purchased goods and services from companies managed by his associates at “prices significantly higher than the market”.

Zhao’s case has been given to prosecutors who will file charges against him, the agency said.

ASML's TWINSCAN NXE:3400B semiconductor lithography tool. ASML chip
ASML’s TWINSCAN NXE:3400B semiconductor lithography tool. Image credit: ASML

Chip push

Key players in China’s semiconductor industry were investigated last year as the country’s drive to develop an independent capacity for producing high-end chips failed to produce the desired results.

China has poured billions into the industry in recent years, but export restrictions put into place by the US government, along with allies including the Netherlands and Japan has left companies struggling to obtain the technology needed to design and manufacture the most advanced chips.

Tsinghua Unigroup was formerly a branch of the prestigious Tsinghua University, the alma mater of president Xi Jinping.

Through a series of acquisitions over the past decade, the state-backed company became one of China’s biggest chipmakers, but under Zhao’s leadership it collapsed under a mountain of debt.

Anti-corruption drive

Zhao then publicly fought a $9 billion (£7.3bn) bailout of Unigroup before being ousted.

The 20-month restructuring was completed last July, placing it under the control of a consortium led by two state-backed venture capital firms.

At around that time Chinese media outlets reported Zhao had been taken from his home by authorities for investigation.

Another area of scrutiny in recent anti-graft probes has been the National Integrated Circuit Industry Investment Fund, known as the Big Fund, the government’s primary vehicle for funding chipmaking ventures.

The anti-corruption agency previously announced several probes into executives who helped manage the funds assets.