Chinese Semiconductor Industry Magnate Zhao Sees Industry in a Bubble
Published By : 04 Jun 2015 | Published By : QYRESEARCH
The chairman of Tsinghua Unigroup Ltd., Zhao Weiguo is of the opinion that the semiconductor industry is inside a bubble since the stock market boom in China. He feels that many of the country’s chipmakers are too expensive due to the intense competition.
China’s Tsinghua University’s investing department has declared that it has investments of $4.7 billion in acquisitions and has no plans of more expansion in the circuit industry. Some China’s semiconductor companies earned lesser than $50 million in their previous financial year but almost half the companies had 100 times more trade gains. Zhao feels that there are very few companies worth acquiring as most of the chip companies are not making profits.
China has encouraged technology related companies growth, to wean the nation’s dependence on infrastructure and property as investment. Falling interest rates and investment from new and beginner investors have also led to the stock market boom led by technology firms.
But the stock fell on China’s CSI 300 Index by 7.8 a huge decline in 6 year period. The Chinese government wants to support acquisitions in semiconductor technology industries as these are important to national security. The government also wants to reduce dependence on foreign suppliers. Tsinghua Unigroup has spoken about 10 billion yuan state funding support and one of the companies units has agreed to buy the Chinese networking and server business of Hewlett Packard for $2.3 billion.
Zhao’s company is now planning to expand its business and he has promised to donate 70% of his assets to train young talent and promote scientific research. According to the Bloomberg’s Billionaire’s Index Zhao has amassed his $2 billion fortune through connecting with Chinese President Xi Jinping’s alma mater Tsinghua University.