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News hardware & software 19 July 2021, 16:09

author: Przemyslaw Dygas

Chinese Giant Goes Bankrupt - is Chip Market in For a Shock?

The chip market may face another shock. All because of the bankruptcy of Tsinghua Unigroup, an important Chinese producer of the aforementioned components.

IN A NUTSHELL:
  • The chip market may be in for another shock in the near future;
  • Tsinghua Unigroup, China's most important semiconductor manufacturer, has declared bankruptcy;
  • It was one of the companies through which the country's government intended to gain independence from foreign chip supplies.

Chip availability issues have continually plagued the industry, and recent predictions regarding the matter have not been optimistic. Unfortunately, it appears that the situation may become even worse. One of the important semiconductor manufacturers, Tsinghua Unigroup, has gone bankrupt, which may have a negative impact on the electronic equipment market. The bankruptcy was demanded by the company's creditors. It was unable to pay its growing debts.

Tsinghua Unigroup is a company supported to a large extent by the Chinese government. There were hopes with the manufacturer would enable China to become independent from foreign supplies of semiconductors. Its bankrupcy is therefore likely to be a severe blowy. The situation may also affect the entire global chip market, which has been struggling for a long time.

Together with the bankruptcy of Tsinghua Unigroup, its subsidiary Unisoc is also in trouble. This is a company that until May was considered to be the fifth largest manufacturer of chips used in the production of smartphones. Therefore, difficulties may also occur on the mobile device market.

The company's insolvency is related to bad investments and the way it is financed. Tsinghua Unigroup relied heavily on government subsidies that guaranteed conditions for development. At the same time, in addition to investing in the production of semiconductors, the company allocated large funds to unprofitable business sectors including real estate, online gambling and foreign smartphone manufacturers.

One of the sources of Nikkei Asia revealed, however, that the problems are unlikely to threaten the company. The Chinese government still wants independence from foreign chip suppliers. Tsinghua Unigroup was the most heavily subsidized local semiconductor manufacturer. Politicians responsible for these plans do not want these investments to be wasted.

However, this does not change the fact that the production of chips will be disrupted for the duration of the company's process of declaring bankruptcy. This may mean another decline in the volume of supply on a global scale. This is another brick in the wall of problems that plague the electronics market.

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