Paul van Gerven
23 November 2020

China’s ambition to reduce its reliance on foreign-produced chips just took some major hits. A major semiconductor conglomerate, the Tsinghua Unigroup, has defaulted on a 200 million dollar bond, triggering a credit rating downgrade. And foundry HSMC, which just like SMIC had plans to start making 7nm chips, has been taken over by local authorities following construction delays and funding shortages.

Tsinghua Unigroup is a subsidiary of the Tsinghua University in Beijing. With stakes in several domestic chip designers and a NAND memory maker, it’s considered a major driving force in China’s bid to set up its own competitive semiconductor industry – a policy goal that has gained even more priority after the US started imposing trade restrictions on semiconductor technology.

Impression of HSMC’s planned fab campus. Credit: HSMC

HSMC, founded in 2017, raised high expectations, too, after hiring former top TSMC executive Chiang Shang-yi as CEO and attracting 19 billion dollars in funding and subsidies. According to several media reports, however, the project has gone belly-up. Chiang resigned in June, describing the experience as a “nightmare” to the South China Morning Post.