Chinese company to raise $12.5bn for memory wafer fab

November 09, 2015 // By Peter Clarke
China's Tsinghua Unigroup Ltd., a state-controlled conglomerate, is planning to invest 80 billion yuan (about $12.5 billion) in a memory chip factory and related acquisitions and is planning to do so through an affiliated company, Tongfang Guoxin Electronics Co. Ltd., according to reports.

Tongfang Guoxin is a manufacturer of piezoelectric quartz crystal components that is traded on the Shenzhen stock exchange (SZSE:002049). The company has said it will raise 80 billion yuan mainly provided by Tsinghua Unigroup affiliated companies in a stock exchange regulatory filing, the reports said. This would be the biggest-ever private placement of stock by a company in mainland China, they added.

The amount Tongfang Guoxin is looking to raise is more than four times the company's market value in October, according to a Digitimes report. The same report said that 60 billion yuan (about $9.4 billion) would be used to finance the construction of a memory wafer fab and 3.79 billion yuan (about $600 million) would be used to purchase a 25 percent stake in packaging and test services company Powertech Technology (see China to take 25% stake in Taiwan's Powertech ). The remaining 16.2 billion yuan (about $2.55 billion) would be used for other acquisitions, the report quoted Tongfang Guoxin as saying.

A Nikkei Asian Review article said the total cost of the wafer fab would be 93.2 billion yuan (about $14.65 billion). The fab is likely to be focused on the production of non-volatile memory such as NAND flash.  

Tsinghua Unigroup, an offshoot of Tsinghua University, is one of the levers being used by the Chinese government to build up the country's position in the semiconductor industry by way of a series of mergers and acquisitions.  

In July Tsinghua Unigroup floated the idea of a $23 billion bid for US memory chip company Micron Technology Inc. (Boise, Idaho). And in October it was announced that Chinese state-controlled Unisplendor Corp. would take a 15 percent stake in disk drive company Western Digital, which in turn is buying flash memory chip company SanDisk Corp.

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