[Epoch Times December 25, 2021](Hong Kong Epoch Times reporters Winnie and Liang Xin interviewed and reported) After China’s largest chip company Ziguang Group announced bankruptcy and reorganization in July this year, it announced a reorganization plan in mid-December. Chairman Zhao Weiguo questioned and was reported to the CPC Central Commission for Discipline Inspection. Expert analysis believes that the lack of supervision under the CCP system led to the bankruptcy of state-owned enterprises, and Ziguang’s restructuring plan was questioned and involved conflicts of interest.
The manager of Ziguang Group announced on December 10 that the “Zhilu Jianguang Consortium” composed of seven companies including Zhilu Capital and Jianguang Assets has been selected as a strategic investor of Ziguang. The two parties signed the “Reorganization Investment Agreement” on the 13th and submitted the draft of the reorganization plan to the Beijing No. 1 Intermediate Court.
According to the reorganization draft, the “Zhilu Jianguang Consortium” will invest 54.9 billion yuan (approximately US$8.8 billion) to take over 100% of the shares of Unisplendour after the reorganization.
However, on December 15, Zhao Weiguo, chairman of Ziguang Group, strongly questioned whether Ziguang was insolvent. He believes that Ziguang’s assets are seriously undervalued, and the restructuring plan will directly cause the loss of state-owned assets of 73.4 billion yuan (approximately 11.7 billion US dollars) (the future value of hundreds of billions of yuan) in the current period.
On the same day, Zhao Weiguo made a real-name report on the Ziguang manager to the Central Commission for Discipline Inspection and the Disciplinary Inspection Unit of the General Office of the State Council of the Communist Party of China, and called on the professional state-owned institutions of the Ministry of Finance of the Communist Party of China to reassess the capital of Ziguang Group.
On December 16, the manager of Unisplendour stated that in the past few years, Zhao Weiguo manipulated Unisplendour Group to frequently carry out domestic and overseas mergers and acquisitions expansion through huge financing, resulting in excessive debt scale, coupled with poor management, and Ziguang’s debt crisis broke out in 2020 and its cash flow was exhausted. .
The manager of Tsinghua Unigroup also stated that third-party professional institutions, including auditing and evaluation agencies, were jointly selected by creditors, managers, and regulatory agencies; as of June 30 this year, Tsinghua Unigroup’s reorganization of the main owners’ equity was -44.278 billion. RMB (approximately 7.084 billion U.S. dollars) has an objectively fair market value of approximately 121.478 billion RMB (approximately 19.436 billion US dollars), matching the proposed settlement of debts of approximately 137.609 billion RMB (approximately 22.017 billion US dollars), which proves that Ziguang Group is insolvent.
Before the reorganization, Beijing Jiankun Group, which Zhao Weiguo actually controlled, held 49% of Ziguang, and Tsinghua University held 51% of the shares through Tsinghua Holdings. However, after Ziguang was taken over by the CCP government working group in November 2020, Zhao Weiguo has actually lost his management authority over Ziguang.
Expert: It is inevitable that Ziguang will have problems
Professor Yu Weixiong, an economist at the Anderson Forecast Center of the Anderson School of Management at the University of California, Los Angeles (UCLA), told reporters that in the context of the CCP’s appeal and support for Chinese companies to independently research and develop chips, Ziguang has aggressively acquired chip companies and even arrogantly wants to acquire TSMC. Unscrupulous borrowing for acquisitions without a supervision mechanism will inevitably lead to problems.
As China’s largest semiconductor company, Unisplendour has aggressively acquired chip companies with the support of the Chinese Communist government. Between 2014 and 2020, it has acquired more than 20 companies.
In addition to TSMC, the world‘s largest foundry company, and MediaTek, the world‘s top ten IC (chip) design company, Ziguang also tried to acquire US chip manufacturer Micron for US$23 billion in 2015, but it ended in failure. However, this move aroused the vigilance of the US government and regarded it as a typical example of Chinese companies using government financing to purchase sensitive technologies in their entirety. The United States began to blacklist some Chinese companies out of national security considerations.
The Voice of America quoted expert analysis as saying that the CCP’s strategy of not following the right track in the semiconductor field and wanting to “overtake on a curve” is doomed to fail. Since the end of 2020, Ziguang Group has continued to have a debt default crisis.
Huang Qiyuan, a senior venture capitalist in Taipei and the president of Lantao Asia, said that Ziguang is a school-enterprise of Tsinghua University, Xi Jinping’s alma mater, and a fully state-owned enterprise. The remaining debt is “a mess,” and future reorganization will be a “troublesome and huge project.”
When asked why Zhao Weiguo questioned the reorganization plan and made a real-name report, Yi Xianrong, the former director of the Financial Development Office of the Chinese Academy of Social Sciences, told The Epoch Times reporter: “Obviously, this involves a conflict of interests. As the chairman, of course he He is unwilling to go bankrupt and reorganize, and he may be held accountable.”
Yi Xianrong believes that due to the ills of the CCP’s system, CCP’s state-owned enterprises have infinite power, just like government officials. As long as state-owned enterprises take the lead, they will defraud the government’s money, loans, and financing, and then give the government to a bankrupt. Enterprises, including Ziguang Group, also include Wuhan Hongxin.
Blind core making leads to a large number of unfinished projects
With the support of the Chinese Communist Party’s policies, a large number of semiconductor-related companies have emerged in China. According to data from the professional version of the Chinese business query platform “Tianyancha”, as of October 27, 2020, there are more than 270,000 companies in China that include “integrated circuits, chips, and semiconductors.”
Wuhan Hongxin, which was established in November 2017, declared an investment of up to 130 billion yuan (approximately US$20 billion). It was once listed as a star project in Wuhan, and was listed as a major special project in Hubei Province for two consecutive years, and received 153 100 million yuan (approximately US$2.448 billion) of government funding.
However, Wuhan officially disclosed in July 2020 that the project faces the risk of breaking the capital chain at any time. This means that Wuhan Hongxin has not produced a chip, which becomes a “junk” project.
Except for Ziguang and Wuhan Hongxin, Chinese chip companies are everywhere. According to incomplete statistics, in the past two years before October 2020, tens of billions of RMB semiconductor manufacturing projects in Sichuan, Guizhou, Jiangsu, Hubei, Hebei and other places have been unfinished, including Chengdu GF, Nanjing De Kema, Dehuai Semiconductor, Guizhou Huaxintong, Hebei Angyang Microelectronics and so on.
CCP hard to achieve the goal of making chips
The “National Integrated Circuit Industry Development Promotion Program” issued by the CCP in June 2014 stated that the CCP plans to basically complete the technologically advanced integrated circuit industry system by 2020, and the industry as a whole will reach the international advanced level by 2030. The “Made in China 2025” plan launched by the CCP in 2015 also claimed that it plans to achieve 70% of the chip homemade rate by 2025.
In this regard, Yu Weixiong said that many technologies can not be developed without spending a lot of money, and many other conditions are needed. “Not to mention it is 2025. Even by 2035, it is impossible for the CCP to achieve a 70% IC self-made rate. “
According to data from the American semiconductor research company IC Insights, after the CCP has invested tens of billions of dollars, China’s domestic chip production self-sufficiency rate will only reach 15.9% in 2020, slightly higher than the 15.1% in 2014.
Speaking of China’s economic prospects, Yu Weixiong reminded investors that the current overall environment of China’s economy is very bad. If you want to invest in Chinese companies, you must be very careful, because China will have a very long period of pain in the future.
Yu Weixiong believes that the Chinese Communist government needs to change this way of confronting the world. The Chinese Communist Party needs to review itself and think about why Western countries, led by the United States, impose sanctions on the Chinese Communist Party. In addition, the over-leveraged and over-expanded investment models of Chinese companies like Ziguang and Evergrande need a turning point.
Editor in charge: Lian Shuhua#
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