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State-backed Fund to Invest 24 Billion Yuan in ZTE

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Published on : Nov 25, 2015

The global semiconductor industry is dominated by China. However, in the past few months there has been a slowdown in the overall economy of China. This has impacted the semiconductor industry in the country as well. Nevertheless, in order to revive its domestic semiconductor industry, China is increasingly investing in new projects and talent.

Recently, it was known that China is planning to launch a massive state-led project. According to sources with knowledge of the matter, China is planning to install a massive chip plant that will be based Wuhan, Hubei Province and the project will be around US$25 billion. To boost its semiconductor industry’s growth, investors are pouring in a huge amount of money. These investors are not only private organizations but also many state governments. Furthermore, China is trying to recruit talent from foreign countries such as Japan, according to people with knowledge of the matter.

To revive the semiconductor industry, China has taken another major step. A state-backed fund has now agreed to invest 2.4 billion yuan in the firm ZTE Microelectronics Technology. This company is a subsidiary of the nation’s second largest manufacturer of telecommunications equipment. During a regulatory filing of the agreement, the chairman from ZTE, Hou Weigui stated that the investment would boost its plan to expand in China and in other countries. Hou stated that the introduction of strategic capital will let their firm strengthen its R&D capabilities and also reserve its core patents.

According to the Ministry of Industry and Information Technology, the semiconductor industry was critical to the development of the nation and information security. However, this sector remains too small currently to meet the domestic demand. The domestic demand is projected to rise to around 1.2 trillion yuan this year as compared to the 916 billion yuan noted in 2013.