China hits Big Fund chip executives with corruption probes

China’s top anti-corruption watchdog has launched an investigation against several officials linked to the country’s biggest chip investment fund, as Beijing scrutinizes the sector in its race for technological self-sufficiency.

Chinese officials revealed this week that they are investigating three former executives linked to the National Integrated Circuit Industry Investment Fund, known as the “Big Fund,” which raised $51 billion in the last two funding rounds.

China’s Central Commission for Discipline Inspection (CCDI) said it was investigating Du Yang, a former director of SINO IC Capital, which manages the assets of Big Fund, for “suspected serious violations of discipline and laws”. The CCDI said it is also investigating two former investment managers at SINO IC Capital, Yang Zhengfan and Liu Yang.

At least five chip fund executives have been investigated for alleged fraud in the past two months. The probe follows the collapse of state-backed conglomerate Tsinghua Unigroup, a semiconductor manufacturer that began a court-ordered restructuring last year.

Beijing is under pressure to speed up its semiconductor industry as growing US sanctions threaten its chip supply chain. The FT reported this week that Taiwanese security officials are wanted Foxconn will divest its stake The country is trying to align itself more closely with the US in the Tsinghua Unigroup.

“Beijing is becoming more eager to see the performance of companies,” said Linghao Bao, an analyst at Trivium China. “Corruption is not tolerated here.”

He added: “You can bet Beijing is not happy about the fact that one of its most important state-owned semiconductor companies has gone bankrupt.”

On July 30, the CCDI said it was investigating Big Fund General Manager Ding Wenwu for similar allegations. Two weeks ago, Lu Jun, the former head of SINO IC Capital, was detained by the anti-corruption agency.

Chinese news outlet Caixin reported last month that Wang Wenzhong, a former classmate of Lu who ran a small fund in partnership with Big Fund, and Zhao Weiguo, who led the cash-strapped chipmaking giant Tsinghua Unigroup had been under investigation for a decade. Former Tsinghua Unigroup co-chairman Diao Shijing is also under investigation, Caixin said last week.

The Financial Times has not independently verified these matters. Wang, Zhao and Diao could not immediately be reached for comment. Big Fund did not immediately respond to a request for comment.

Big Fund, established in 2014 to promote China’s self-reliance in chips, raised Rmb138.7bn for the first round of funding and Rmb204bn for the second round. The fund is backed by deep-pocketed state investors including the Ministry of Finance, China Tobacco, China Mobile and China Development Bank.

Over the years, Big Fund has expanded its investment portfolio from chip manufacturing to raw materials and has financed homegrown champions such as Semiconductor Manufacturing International Corporation (SMIC) and Hua Hong Semiconductor, two of the country’s largest chip manufacturers.

But China’s ambitions for technological self-sufficiency have been hit by Washington’s expanding embargo and export restrictions, forcing SMIC to abandon plans to produce some types of advanced chips and halting its global growth.

Source link

Leave a Comment