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China’s Tsinghua Unigroup reveals $47 billion bid to become major league chip maker

Mon 16 Nov 2015

In an interview today the head of China’s Tsinghua Unigroup revealed that TU will invest 300 billion yuan ($47bn) across the next five years with the ambit of becoming the world’s third largest chip-maker, freeing China further from its dependence on foreign imports in the $355bn global chip market and potentially opening up new western markets.

Speaking with Reuters, TU Chairman Zhao Weiguo said that the company, led by state-controlled Tsinghua University, is currently in talks with a U.S. company ‘involved in the chip industry’, and that the deal was likely to be finalised by the end of November. However Zhao discounted the possibility of buying a shareholder stake in the U.S. company, claiming that such a move would be too “sensitive” for the U.S. government to support.

Zhao said “If you can’t be the top-three giant, it will be very hard to develop your business in the chip industry,” and asserted that the next five years would be “key”, alluding to the “enormous market out there”.

The chip market has streamlined out all minor contenders in the last 15 years, with ARM on a separate mission from mainstream high-end industrial chip output. The current world leaders in chip manufacturing are Intel, Samsung and Qualcomm Inc., current holder of the third spot that Tsinghua Unigroup covets. However the chip-making concern likeliest to be the mysterious U.S. company is Idaho-based American multinational corporation Micron, a concern which TU was actively looking into this summer.

In August TU chairman Xu Jinghong presaged today’s revelation, when TU announced its intentions to partner with Microsoft and Facebook in the future. “To build good partnerships, you have to be strong yourself first,” he said. “If you aren’t powerful, no one will need to associate with you.”

In September of 2014 Intel purchased a stake in Tsinghua Unigroup, and in May of this year Hewlett Packard sold a majority share to it.

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