Tsinghua arm readies to take on Qualcomm

Tsinghua Holdings Co Ltd, a technology conglomerate backed by Tsinghua University, plans to invest at least 30 billion yuan ($4.76 billion) in developing mobile chip technology, highlighting the company's ambition to challenge Qualcomm Inc's dominance in the country's chip market.

"To catch up with Qualcomm as soon as possible, we will pour 30 billion yuan, and probably even more, into the research and development of mobile chips in the next few years," Xu Jinghong, chairman of Tsinghua Holdings, told China Daily in an interview on Tuesday.

Tsinghua Holding said a certain proportion of the money will come from government funding and its partners. In February, its unit Tsinghua Unigroup Ltd said it has received 10 billion yuan from governments to invest in chip companies.

"Frankly, compared with global competitors, we are still three-to-five years behind in technology, especially in cutting-edge 4G and 5G products," Xu said, "but if we don't close the technological gap, we will never win."

The comment came after Tsinghua Unigroup Ltd filed a plan to buy US chipmaker Micron Technology Inc for $23 billion. Xu said earlier it was still in discussions for a potential deal.

"We will continue to expand our presence in the integrated circuit industry through both acquisition and self-research," he said, adding chips will be one of the focuses of the Beijing-based company.

Roger Sheng, senior analyst at research firm Gartner Inc, said the government's emphasis on the semiconductor sector is the biggest advantage for Tsinghua Unigroup.

"Few tech companies in China have such a large amount of capital at their disposal as Tsinghua Holdings does," Sheng, said adding "despite its current technological weakness, it has ambitions and is acting very quickly".

"Qualcomm's pioneering efforts in the sector also established a successful business patten which Tsinghua can follow," Sheng said.

Tsinghua Holdings' intensified efforts to boost its chip-related resources come as the Chinese government seeks to reduce the country's reliance on foreign technology, on worries that it may hurt national security.

The company evolved into the largest chip firm in China after it acquired Spreadtrum Communications Inc, the world's third-largest mobile phone chip maker, and RDA Microelectronics Inc, the fourth-largest, in 2013.

"If we can manage to catch up with Qualcomm technologically, our innovation capability, the huge smartphone market in China as well as the labor cost, which starts rising but is still lower than that of the US, can offer us considerable commercial opportunities," Xu said.

Earlier this month, Tsinghua Holdings announced it has made a breakthrough in chemical mechanical polishing, an important process in manufacturing chips. One of its unit successfully developed the first 12-inch polishing machine in China which could planarize semiconductor wafers to an extent that every square of a nanometer (billionths of a meter) is flat.

"The machine shows that we are the first Chinese company to have mastered the technology, and enables us to produce extremely tiny chips for smart wearable gadgets," said Li Zhongxiang, vice-president of Tsinghua Holdings.

Ma Si contributed to this story.