China Set To Spend Billions On Homemade Hardware

The hardware market could be about to gain another heavyweight following reports that a Chinese firm is preparing a major investment into the space.

Tsinghua Unigroup (TU), which is owned by the Chinese government, is set to announce a $12bn plan to make its own memory chips in order to lessen the reliance on Western firms such as Qualcomm and Intel.

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The Wall Street Journal reports that the firm will set up a new subsidiary, Tongfang Guoxin Electronics (TGE), which has a filing on the Shenzhen stock exchange, to oversee the research and acquisition of companies needed to build advanced chips.

TGE’s filing said it hoped to raise $12.6bn (£8.34bn) in a private placement, with further funds coming from both TU and investment company of TU chairman Zhao Weiguo.

Some of this investment will be used to finance construction of a memory chip plant, some to purchase a 25 percent stake in Taiwanese IC backend service company Powertech Technology (PTI), and the rest to acquire other suppliers in the chip industry

The move may provide major Chinese firms such as Lenovo, Huawei and ZTE with the option to buy home-made chips for their devices, rather than using those from American companies.

There have been several high-profile clashes between the notoriously private Chinese government and foreign manufacturers, as the former looks to encourage competition from native firms.

Most notably, Qualcomm was hit with an investigation by Chinese authorities for well over a year following claims that the company reportedly charged higher prices to Chinese companies than in other countries, claims which could land the company with a $1bn fine.

The distrust was also working the other way, as earlier this year the US government considered imposing economic sanctions on China in retaliation for its suspected involvement in cyber-attacks intended to benefit the Chinese economy.

However the two companies later agreed to work together following high-profile talks between US President Barack Obama and his Chinese counterpart, President Xi Jingping.

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