State-backed China fund buys stake in ZTE unit
China National Integrated Circuit Industry Investment Fund (IC Fund), a national fund established to promote the domestic semiconductor industry, has agreed to pay RMB2.4 billion ($376 million) for a 24% stake in a unit of domestic electronics manufacturer ZTE Corporation.
According to a filing, the IC Fund is buying new shares issued by the ZTE Microelectronics Technology. Upon completion of the deal, the parent's stake in the unit will be reduced to 68.4% from 90%.
Founded in 1985, ZTE is listed on both the Hong Kong and Shenzhen stock Exchanges. It manufactures mobile devices and network solutions to corporate and retail clients. Its subsidiary ZTE Microelectronics, formed in 2003, is responsible for design, production and sales of integrated circuits for the ZTE Corp.
Launched last September, the IC Fund counts the Ministry of Finance, China Development Bank Capital (CDB Capital), China National Tobacco Corporation, Etown Capital, and China Mobile Communications among its shareholders.
Revenue generated from China's IC industry - including IC design, foundries and integrated database management system (IDMs) companies - is expected to reach $55 billion in 2015, up from $40.5 billion in 2013.
The State Council issued the national guideline to boost the domestic semiconductor industry in June last year, setting a goal of $143 billion in revenue from the IC industry by 2020. The aim is to become a global leader in mobile end-product devices, network communication, cloud computing, internet-of-things and big data in five-year time.
By 2030, China will have a leading position in all primary segments of the IC industry supply chain, the guideline said.
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