China’s move to develop its technology is seen by the government as crucial to national security and is also intertwined with moves to make its economy less dependent on the smokestack industries that have underpinned its ascendance.

While the recent deals give Tsinghua scale, China’s ability to seriously challenge Samsung Electronics Co., Toshiba Corp., and Micron Technology Inc. in memory will come down to accessing technology, according to analysts at China International Capital Corp.

“China is capable of manufacturing semiconductors, but lacks mainstream DRAM and NAND Flash technologies, which are possessed by international giants,” CICC analysts led by Andrew Lin wrote in a Nov. 6 report.

Tsinghua affiliate Tongfang Guoxin Electronics Co. will sell 80 billion yuan ($13 billion) of stock to eight companies and employees in the placement, the company said in a filing to the Shenzhen Stock Exchange on Thursday. Of the proceeds, 60 billion yuan will go toward a memory chip plant.

Among the eight companies buying shares, six are controlled by Tsinghua Holdings Co., which will remain the controlling shareholder of Tongfang Guoxin after the deal, according to the filing. The companies will purchase the shares with cash.

The money being raised is four times Tongfang’s 20 billion yuan market value when its shares were suspended last month. The stock surged by the 10 percent daily limit in Shenzhen on Friday.

“The new Tongfang Guoxin will be the only listed platform for semiconductors,” Zhao said. “In the future, it will be an important platform for Unigroup’s chip sector. Our goal is that we will develop Tongfang Guoxin as a global chip giant.”

Tsinghua’s acquisitive ways has seen it consider bidding for Micron, people familiar with the matter said in July.

Deals that have reached a formal stage include Tsinghua Unisplendour Corp.’s purchase of a $3.8 billion stake in Western Digital and Unigroup’s acquisition of Spreadtrum Communications Inc. and RDA Microelectronics Inc.

Intel Corp. last year agreed to buy as much as 20 percent of Unigroup.

Tsinghua University in Beijing is one of China’s most prestigious colleges, with alumni including Zhao, Chinese President Xi Jinping and former President Hu Jintao.

The university’s business arms have forged partnerships with Hewlett-Packard Co. and other technology companies, creating in Unigroup a business spanning cloud computing, mobile and semiconductors.

By: DocMemory
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