Since the end of last year, a series of bond defaults have plagued Tsinghua Unigroup, China’s largest semiconductor group, bringing it closer to b

China’s Handling of Tsinghua Unigroup Reveals The Next Stage of Its Industrial Policy

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2021-07-16 12:30:10

Since the end of last year, a series of bond defaults have plagued Tsinghua Unigroup, China’s largest semiconductor group, bringing it closer to bankruptcy proceedings. Now, Tsinghua Unigroup has confirmed that one of its creditors, Huishang Bank, has requested a bankruptcy restructuring.

Following the revelation, it has been revealed that Alibaba, also one of China’s largest tech conglomerates, might acquire a 46.45% stake in Tsinghua Unigroup’s cloud computing subsidiary in coordination with several state-owned investment groups, among them Beijing Electronics Corporation and JAC Capital.

The subsidiary in question, Unisplendour Corporation (UNIS), focuses on the building of cloud infrastructure. Through Alicloud, Alibaba itself is already the world’s third largest provider of Infrastructure as a Service (IaaS). To support its expanding cloud business, Alibaba has also founded its own semiconductor business, T-Head.

Given Tsinghua Unigroup’s track record of rampant expansion, especially after its flamboyant former chairman, Weiguo Zhao, publicly declared his ambition to acquire TSMC and MediaTek, Tsinghua Unigroup’s imminent demise is widely perceived as a systematic failure of China’s semiconductor policy and even a turning point in its strategy to achieve chip autonomy. However, the intervention headed by Alibaba as well as the Chinese government’s general reaction to the matter indicates that China’s industrial policy mechanism is staying on its course.