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Unigroup's default on a $198 million bond payment puts doubt on China's DRAM ambition

Friday, November 27, 2020

Earlier this year we were told that Tsinghua Unigroup was going to break ground on a DRAM fab this year.

Unigroup was reported by the Nikkei to have a $110 billion budget for the venture.

Now we’re told that Unigroup has defaulted on a $198 million bond payment.

It’s not exactly a promising signal for your ability to finance a $110 billion project if you can’t meet a $198 million debt obligation.

And, remember, Unigroup is owned by Tsinghua University – Xi’s alma mater – you would not think he would be prepared to see his old university discredited if he thought it should be supported in its DRAM ambition.

Funnily enough, this time last year Unigroup put out a statement denying that it had defaulted on a debt. It’s debts have been mounting for some years.

Tsinghua’s DRAM initiative was to have been China’s third venture into DRAM manufacturing.

An earlier DRAM project – Fujian Jin Hua IC DRAM – was abandoned when the US refused to send it equipment

The other China DRAM effort is Chanxin Memories, formerly called Innotron and before that called Hefei. It is said to have started production but reported to be facing yield issues.

Other chip initiatives in China which have foundered recently are:

Wuhan Hongxin Semiconductor Manufacturing Company (HSMC) had been building a $20 billion semiconductor production site in Dongxihu for two years but the local government recently said that construction has been halted because the money has run out and that it had bought out all other shareholdings making HSMC 100% owned by the Dongxihu local government.

That follows abandoned fab plans at the jv between Globalfoundries and the City of Chengdu, and the bankruptcy of Tacoma Nanjing Semiconductor Technology which was building a $3 billion fab backed by the government.

If China was still committed to developing its chip industry wouldn’t it use its vast resources to bail out these projects?

To lose one national semiconductor project may be regarded as a misfortune, to lose half a dozen looks like China’s giving up on the sector.

By: DocMemory
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