Beijing-backed tech conglomerate Tsinghua Unigroup is undeterred in its race to become a global chip titan, even after a series of setbacks in its recent overseas shopping spree.

Group Chairman Zhao Weiguo told the Nikkei Asian Review that by 2020 his group will definitely close in on Qualcomm and MediaTek, the world's top two mobile chip providers. The group aims to be among the top five memory chip makers globally in a decade, according to Zhao.

"I think it only takes time for China to catch up in the semiconductor industry," Zhao said, referencing China's rise in the global TV panel market over the past decade.

"Taiwanese and South Korean chip industries developed technologies over time and can compete with the U.S. chipmakers now. China can make it, too," he said.

At the end of March, Zhao's group secured new funding of up to 150 billion yuan ($21.8 billion) from both China Development Bank and China Integrated Circuit Industry Investment Fund, a major state-owned investment vehicle created to help the country become self-sufficient in semiconductors. The new round of financing is for future projects aimed at strengthening the domestic chip sector.

Zhao, one of the leading figures spearheading China's chip ambitions, said Tsinghua Unigroup is focusing on advanced 3D NAND flash memory, used in a wide range of electronics such as smartphones, and chips for mobile and other connected devices.

Currently, NAND flash memory chips, including advanced 3D types, are all produced by non-Chinese companies, including Samsung Electronics, Toshiba, Western Digital, SK Hynix, Micron and Intel.

To carve out China's place in the global semiconductor market, the group's affiliate, Yangtze River Storage Technology, known as Changjiang Storage, has announced construction of two memory chip facilities with a combined value of $54 billion in Wuhan and Nanjing.

For developing memory chips, according to Zhao, at least several thousand engineers will be needed for its Wuhan facility, which will begin first stage production by 2018.

Tsinghua Unigroup also owns Spreadtrum Communications, a homegrown mobile chip supplier and rival to Taiwan's MediaTek and U.S.-based Qualcomm, the largest smartphone chip maker in the world.

Spreadtrum will be able to catch up to Qualcomm and MediaTek -- or at least narrow the technology gap between them -- when 5G chips, which the company has already started to develop, become a mainstream product in a few years, Zhao said.

5G, or fifth generation, refers to the next generation of mobile communications technology that may be available by around 2020. It is expected to offer faster connection speeds and lower latency -- the time a telecommunications network needs to respond to user input. 5G will empower emerging technologies, including autonomous cars and artificial intelligence as well as augmented and virtual reality.

Yet as China aggressively pursues its own chip technology to reduce reliance on foreign companies, it also faces growing resistance worldwide to its acquisition attempts. Some governments see a growing Chinese presence in this sector as threats to their own national security.

This is likely why Tsinghua Unigroup failed in its previous bids to invest in Micron and Western Digital, two major American semiconductor companies. Moreover, the state-backed group's attempt to purchase a 25% stake in each of three Taiwanese chip assemblers -- Siliconware Precision Industries, Powertech Technology and ChipMOS Technology -- also fell through following regulatory scrutiny.

As a Chinese company in search of foreign deals, setbacks are not unique to Tsinghua Unigroup: U.S. regulators have blocked other acquisitions involving Chinese capital in recent months. In early 2016, the inter-agency Committee on Foreign Investment in the United States failed to approve an offer made by a Chinese consortium for a U.S.-based lighting unit of the Dutch electronics conglomerate Philips.

Last December, the administration of then-U. S. President Barack Obama nixed the sale of German semiconductor equipment maker Aixtron to a Chinese company.

By: DocMemory
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