China's state-backed Tsinghua Unigroup is pushing for an initial public offering of its mobile chip unit, Unigroup Spreadtrum RDA, in 2018, sources told Nikkei Asian Review.

Unigroup Spreadtrum RDA, China's top mobile chipmaker which supplies to Samsung Electronics, has been spearheading Beijing's ferocious efforts to cultivate its domestic semiconductor industry to reduce dependence on foreign imports due to economic and security concerns.

"The company is currently talking to accountants and lawyers to prepare for its initial public offering in China though they have not quite decided which stock exchange they want to choose for listing," said a person familiar with the matter. "Tsinghua Unigroup has always wanted to have Unigroup Spreadtrum RDA go public."

The person together with another industry source said the IPO was set to be launched in 2018.

Roger Sheng, a Shanghai-based analyst with research company Gartner, says it is a smart move on Tsinghua Unigroup's part to take Unigroup Spreadtrum RDA public.

"Tsinghua Unigroup would need so much more money to develop next-generation mobile chips and it would be a relief for the company to raise funds from investors rather than paying out from its own pockets," Sheng said.

Sheng says Unigroup Spreadtrum RDA will be able to secure a higher price-to-earnings ratio in China than foreign markets with Beijing treating semiconductor production as a key industry.

He said the chip maker could become very popular with local investors as it is a well-known semiconductor company in China.

A Tsinghua Unigroup spokesperson confirmed to NAR that his group was working to bring Unigroup Spreadtrum RDA public, but declined to provide details on the schedule. Although the deal is still subject to external factors and the company has not decided where to list, there is little doubt that it will be one of the most prominent and closely watched IPOs to hit the market.

Tsinghua Unigroup is a Beijing-backed vehicle that has been pouring funds into various domestic tech programs, including an ongoing investment of more than $54 billion in two memory chip projects in Nanjing and Wuhan, as part of the government's policy directive to boost the domestic sector.

Over the past two years, Tsinghua Unigroup has been on an overseas shopping spree to acquire semiconductor companies, especially those in the U.S. and Taiwan.

By: DocMemory
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