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Debt-ridden Tsinghua Unigroup, one of China’s largest semiconductor conglomerates, has been acquired by Beijing Zhiguangxin Holding.

The new parent brings an equity-for-debt plan and a 60 billion yuan (about US$8.9 billion) fund to pay off remaining debts, according to reports. As a result, subsidiary chip companies Unisoc – the merger of Spreadtrum Communications and RDA Microelectronics – and Yangtze Memory Technology Co. (YMTC) gain a new lease of life, and the Chinese state saves some face.

Tsinghua Unigroup (Beijing, China), origially part-owned by China’s leading university, had grown over the previous decade by way of a series of costly acquisitions that have failed to produce substantial revenue. By June 2020 Tsinghua Unigroup had debts of $31 billion and only $8 billion in cash.

The company itself was often seen as vehicle for China state policy. It had made an unwelcome $23 billion bid to acquire Micron Technology back in 2015, which appeared to coincide with the start of US-China trade tension. Tsinghua Unigroup subsequently started spraying money around in China to develop domestic memory makers. Towards the end of the decade it became clear that it had made some poor investments but its collapse would also have hit key companies such as YMTC, which is a national champion for 3D-NAND development (see YMTC preps second Wuhan wafer fab for NAND flash).

Fresh start

Unigroup now has a new equity owner, new directors and general manager, according to local reports that reference business registration documents. Beijing Zhiguangxin Holding was formed in 2021 by Wise Road Capital and Beijing Jianguang Asset Management Co, known as JAC Capital.

Wise Road and JAC are also often seen as instruments of China semiconductor policy. The two helped buy out Nexperia from NXP in 2016 (see NXP downsizes by 25 percent with sale of business unit to China). Wise Road thought it had successfully acquired MagnaChip’s foundry operation in South Korea in 2021 until the United States put a block on the deal via its CFIUS committee (see Magnachip in play with last minute rival bid).

Zhiguangxin’s biggest shareholder, with a 29 per cent stake in the company, is state-owned fund Wuhu Xinhou Yunzhi Equity Investment Partnership from eastern Anhui province.

The necessity for Unigroup to enter bankruptcy protection in July 2021 was a major blow and brought with it concerns that it would drag down other more successful companies, such as YMTC.

Related links and articles:

Tsinghua Unigroup creditors call for restructure

YMTC preps second Wuhan wafer fab for NAND flash).

NXP downsizes by 25 percent with sale of business unit to China

Magnachip in play with last minute rival bid

China bids $23 billion for Micron

 


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