HONG KONG/TAIPEI — Tsinghua Unigroup, China’s embattled tech behemoth, said Friday that one of its creditors has sought a court to start bankruptcy proceedings against it, the latest setback to China’s objective of developing a self-sufficient chip industry. Tsinghua Unigroup, the parent company of various chipmakers, including China’s No. 2 mobile chip producer UNISOC, claimed it got a notification from Beijing Municipality’s First Intermediate People’s Court. A creditor has asked the court to support the conglomerate’s bankruptcy protection, claiming the company has failed to pay its debts. Tsinghua Unigroup, which is majority owned by President Xi Jinping’s alma school Tsinghua University, has missed a spate of bond payment dates since November, prompting the creditor’s action. Tsinghua Unigroup said in a statement to Nikkei Asia that “our group would fully comply with the court in conducting a judicial inquiry and proactively solving debt risks.” “We agree with the court that the creditor’s legal rights must be protected in accordance with the law.” According to public records on Chinese business data portal Qichacha and a Shenzhen-listed subsidiary, the creditor is the Hong Kong-listed Huishang Bank, a midsize state-owned bank situated in Anhui Province. As of publishing, the bank had not responded to a request for comment.
At an industrial event, a Tsinghua Unigroup booth: The company is the parent company of chipmakers vying to compete with global leaders such as Samsung Electronics and Qualcomm. (Shunsuke Tabeta/Shunsuke Tabeta/Shunsuke Tabeta/Shun
Tsinghua Unigroup has benefited from central and local government funding for years as it pursued Beijing’s goal of developing a domestic semiconductor industry, which is a key component of the country’s “Made in China 2025” industrial strategy.
Yangtze Memory Technologies, the group’s national memory chipmaking champion, wants to challenge market heavyweights like Samsung and Micron. UNISOC, the company’s mobile chip design business, wants to compete with Qualcomm in the United States and MediaTek in Taiwan. The group’s aspirations to expand its chipmaking capability have been fueled by debt. Tsinghua’s two high-profile projects in China, a massive 3D NAND flash memory factory in Chengdu with a total investment of up to 200 billion yuan ($30.8 billion) and a DRAM memory chip plant in Chongqing, have both experienced severe delays and may be abandoned, according to Nikkei Asia. In order to obtain funds, the business is considering selling a portion of its investment in UNISOC. According to Refinitiv, Tsinghua Unigroup had defaulted or had cross-defaults triggered on seven onshore and offshore bonds worth $3.6 billion at the start of the year. The legal entity status of Tsinghua Unigroup, as well as its manufacturing and other operations, will not be affected by a court-ordered restructure, according to the corporation. The impact on the business of the group’s subsidiaries was similarly understated. State-owned firms and a government fund are among the group’s complicated web of stakeholder interests. According to a source: “China’s government places a high priority on semiconductors. The Tsinghua Group itself may be restructured by a court, although any impact on how the group’s enterprises are run would be minimal.” According to Tsinghua Unigroup, the company’s two listed subsidiaries, Unigroup Guoxin Microelectronics, a security chip developer, and Unisplendour Corporation, a cloud-computing infrastructure provider, reported year-on-year revenue growth of 50% and 30%, respectively, in the first quarter of 2021. “The group’s other companies’ operations are likewise functioning steadily and pleasantly,” the company added. In Shenzhen stock market filings, the two listed units stated that their “shareholder structure could alter in the future” if a key stakeholder were to restructure. Shunsuke Tabeta contributed additional reporting from Shanghai./n
