Tsinghua Unigroup Co., the heavily indebted Chinese chip conglomerate, said a consortium led by two state-backed semiconductor venture-capital firms would become its strategic investor.
The deal is the latest step in Unigroup’s efforts to restructure its assets after a creditor sought its bankruptcy in July. Unigroup, once hailed as China’s semiconductor champion, built its business empire over the last decade through a series of acquisitions, but defaulted on billions of dollars worth of bonds over the past year.
The consortium is led by the Beijing Jianguang Asset Management Co., known as JAC Capital, and Wise Road Capital, Unigroup said in a statement Friday. It didn’t disclose the size of the deal.
Unigroup and the strategic investor then would decide on how to restructure the chip conglomerate’s widely ranging assets, a plan that is subject to court approval.
Unigroup’s subsidiaries include China’s leading memory-chip maker, Yangtze Memory Technologies Co., and mobile chip-set manufacturer Unisoc, as well as makers of cloud-computing chips and smartcards.
Unigroup’s securing of state-backed investors reinforces how eager China is to gain self-sufficiency in semiconductors, a goal that has become more urgent amid trade tensions with the U.S. Some of Unigroup’s projects would help China produce more chips domestically.
JAC and Wise Road Capital together have made semiconductor investments worth billions of dollars in recent years, ranging from chip manufacturers to semiconductor equipment and materials companies.
The two companies completed the purchase of a business unit from Dutch semiconductor giant
NXP Semiconductors N.V.
for $2.75 billion in 2017, a massive cross-border semiconductor deal for China at the time. This month, Wise Road Capital agreed to purchase four plants in China from Taiwan-based
ASE Technology Holding Co.
, one of the world’s biggest chip assembly and testing companies.
The consortium backing Unigroup was chosen for its solid record in investing in the chip sector, which is likely to help convince creditors to offer financial support to Unigroup, according to people familiar with the matter.
They beat out another bidder, which was led by e-commerce giant
Alibaba Group Holding Ltd.
and local government-backed funds, the people said. Alibaba in recent years has been bolstering investments in cloud computing and its in-house chip-design operations.
A Unigroup spokesman said he had no comment beyond the company statement. JAC and Wise Road couldn’t be reached on Friday night, and Alibaba didn’t respond to a request for comment.
Unigroup’s financial difficulties have been striking for a company that in 2015 made headlines with an unsuccessful $23 billion bid for U.S. memory-chip maker
Micron Technology Inc.
Originally an obscure state-backed company peddling tech services and natural gas, Unigroup over the last decade made rampant expansions in semiconductor projects. It announced plans to build multiple chip factories, many of which have since been delayed.
To fund its projects, Unigroup relied heavily on government support, including investments from China’s national semiconductor fund. From 2014 to 2018, government support exceeded 30% of Unigroup’s annual consolidated revenue, according to the Organization for Economic Cooperation and Development, a high level compared with other international chip makers.
As of April, the company and its subsidiaries had defaulted on at least $2.8 billion in domestic and offshore bonds, according to a company filing.
In July, one of Unigroup’s creditors requested a court to start bankruptcy and restructuring proceedings on the grounds that it had failed to repay the debts.
Write to Yang Jie at [email protected]
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