CDB, Sino IC Capital commit $22b to Tsinghua Unigroup

Under the agreement, CDB will provide financing of up to RMB100 billion for the five-year period of 2016-2020, and Sino IC Capital - the sole manager of China Integrated Circuit Industry Investment Fund, a RMB140 billion government-backed fund launched in 2014 - will invest up to RMB50 billion.

By combining industry expertise and capital finance, the partnership will further consolidate and accelerate the development of the integrated circuit industry in China, according to the statement. Tsinghua Unigroup will take the lead to help integrate upstream and downstream assets.

China consumes about $169 billion of microchips every year, more than any other country in the world. They are used domestically and for exports. However, it imports more than 90% of its integrated circuits (ICs), the upstream element of the semiconductor business. The government plans to spend $150 billion over the next decade to develop the domestic semiconductor industry.

Tsinghua Unigroup, which operates under Tsinghua Holdings, is primarily responsible for executing China’s strategy to carve out a meaningful market share in global semiconductor manufacturing.

It privatized US-listed Spreadtrum Communication in 2013 and bought a majority stake in Hewlett-Packard's China data networking business last year. Unigroup also proposed to invest in US-based disk drive manufacturer Western Digital, but the deal was abandoned after US regulators expressed concerns. Two investments in Taiwan – including ChipMOS Technologies and Silicon Precision Industries – have also fallen apart.

Unigroup responded to these disappointments by shifting its focus onshore. It said in January that it planned to build a $30 billion memory chip factory in Nanjing, with monthly production capacity of 100,000 wafers. The products will be used in smart phone and other devices to store data. This followed plans for a $24 billion chip factory in Wuhan.

China Integrated Circuit Industry Investment Fund, also known as China IC Fund, invests across the integrated circuit value chain, including IC chip manufacturing as well as chip design, packaging and testing, and equipment and materials. Sino IC Capital is responsible for the investment selection, execution and exit.

LPs in the fund include CDB Capital, China National Tobacco Corporation, China E-Town Capital, China Mobile, Shanghai Guosheng, and Beijing Purple Communication Technology Group.

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• Topics
• Greater China
• Technology
• Industrials
• Expansion
• China
• China Development Bank
• manufacturing