"PRACTICAL WORLD" - 'TRUE NEWS' MAGAZINE.

"PRACTICAL WORLD" - 'TRUE NEWS' MAGAZINE.
Pratica Radio said: 'Just True News '

Practical World True News Magazine

#Business : China's Tsinghua Unigroup to invest $47 billion to build chip empire

China's Tsinghua Unigroup to invest $47 billion to build chip empire.

BEIJING/HONG KONG 

China's Tsinghua Unigroup Ltd plans to invest 300 billion yuan ($47 billion) over the next five years in a bid to become the world's third-biggest chipmaker, the chairman of the state-backed technology conglomerate said on
Monday.


Chairman Zhao Weiguo also told Reuters in an interview in Beijing that the
company controlled by Tsinghua University, which counts President Xi Jinping
among its alumni, was in talks with a U.S.-based company involved in the chip
industry.


A deal could be finalised as early as the end of this month, he said. He
declined to give more details but said buying a majority stake was unlikely as
it was too "sensitive" for the U.S. government.


"If you can't be the top-three giant, it will be very hard to develop your
business in the chip industry," Zhao said, citing reports that China imported
more chips than crude oil every year.


"The next five years is key... There is an enormous market out there."


Currently, Qualcomm Inc (QCOM.O) holds the
No.3 position in the global chip rankings, behind Samsung Electronics Co Ltd
(005930.KS) and market leader Intel Corp
(INTC.O), which has a market capitalization of
$151.5 billion.


The sheer size of Tsinghua Unigroup's planned investments is almost equal to
Intel's $50 billion chip revenue last year and could disrupt the NAND chip
industry. The top five chipmakers control more than 90 percent of the global
NAND chip market after years of boom-and-bust squeezed out smaller players.


Tsinghua Unigroup's investment drive comes after a two-year deal-making
campaign to bolster China's fledgling chip industry, seen as a strategic
priority for the Chinese government.


Beijing is keen to end China's reliance on foreign semiconductors as it seeks
to build a modern, digitized armed forces capable of matching other advanced
militaries.


It has also attached strategic importance to the development of domestic
semiconductor, server and networking equipment industries amid fears of foreign
cyberspying.


Tsinghua Unigroup has spent more than $9.4 billion making acquisitions and
investments at home and abroad over the past two years, including the purchase
of stakes in U.S. data storage company Western Digital Corp (WDC.O) and Taiwan's Powertech Technology Inc (6239.TW).


In August, it made an informal $23 billion takeover offer for U.S. giant
Micron Technology Inc (MU.O) that was rejected
out-of-hand by the Idaho-based chipmaker amid concerns a deal might endanger
national security.


Tsinghua's failed bid to buy Micron suggests it is serious about expanding in
NAND chips, used for storing music, pictures and other data on mobile devices.


The global chip market was worth $355 billion last year, according to
research firm IHS Technology.


NO PLANS FOR DRAM

Tsinghua Unigroup, which had revenue last year of about 12.3 billion yuan,
was also in talks about cooperating with a "world-class memory chip giant" to
build a new chip factory in China, Zhao said, a move that could help his company
acquire intellectual property needed to manufacture memory chips.


The 90-billion-yuan factory would help meet fast-growing demand of NAND
memory chips.


"We don't have plans for DRAM at the moment," Zhao said, referring to dynamic
random access memory (DRAM) chips that are used mostly in personal computers.


"We need to take one step at a time."

The company was also suspending plans to invest in Taiwanese tech firms due
to regulatory hurdles, after agreeing to take a stake in Powertech Technology
Inc (6239.TW) and expressing interest in more
cross-strait deals.


Industry analysts had expected Tsinghua Unigroup to make further investment
in Taiwan, sparking fears on the island that its chip sector may fall prey to
China's state-backed drive to become a world-class player.


"The regulations do not allow it, so what's the point of talking (to
Taiwanese firms)?" Zhao said, adding that Tsinghua Unigroup was focused on
investing in the United States.
Share on Google Plus

About Pratica Radio

We play blues,country,jazz,lounge,rock,
    Blogger Comment
    Facebook Comment