TAIPEI (Taiwan News) — Deep in debt, the state-backed Chinese integrated circuit designer and manufacturer Tsinghua Unigroup is said to be having difficulty in redeeming its corporate bonds, but five years ago, its top leader bragged about his plan to buy Taiwan Semiconductor Manufacturing Company (TSMC) when visiting the nation, claiming that Taiwan's chip industry would hit a "dead end" if it did not open up to Chinese investment.
"Five years later, Taiwan's semiconductor industry is thriving, while the Chinese chipmakers are in bad shape," Wealth Magazine Executive Director and media tycoon Hsieh Chin-ho's (謝金河) recently wrote in a Facebook post.
Hsieh cited media reports and said the Chinese chipmaker is facing an imminent cash flow crisis as the company is set to repay its bondholders on Monday (Nov. 16). By next January, the company has to pay back a total of US$1.5 billion to other bondholders.
"Over 50 percent of its corporate bonds will mature within one year, with the latest debt-to-asset ratio at 73.46 percent," according to Hsieh. "The future looks bleak for the company."
The media tycoon recalled the visit of Zhao Weiguo (趙偉國), chairman and CEO of Tsinghua Unigroup (紫光集團), to Taiwan in 2015, when the Chinese tech giant's market cap reached a new high. During his visit, Zhao criticized Taiwan's chip industry for being too wary of opening up to Chinese investment, saying this was unwise and warning of a coming end to the road.
Zhao reportedly offered to buy a stake in TSMC when he was in Taiwan. Hsieh disclosed TSMC founder Morris Chang's (張忠謀) response to the proposal: "I am afraid you can't afford it."
Back then, Taiwanese billionaire businessman and Hon Hai Precision Industry Co. (Foxconn) founder Terry Gou (郭台銘), openly showed his disapproval of Zhao during an interview with a Chinese-language business magazine. Gou described the Chinese businessman as a "speculator" fond of manipulating share prices.
The year 2015 was difficult for Taiwan's chip industry, as several Taiwanese companies did not survive the price competition from China, and pressures to sell companies in the industry were abounding. Hsieh said that the leading Taiwanese chipmakers ultimately survived various challenges, including talent poaching from their Chinese rivals, by a dedication to quality manufacturing services. Today, they have become irreplaceable.
"TSMC and MediaTek have significantly progressed over the past five years, while Tsinghua Unigroup was dragged down by its ambitious, but short-sighted plan," wrote Hsieh.
In October, Charles Kao (高啓全), the godfather of Taiwan's dynamic random-access memory (DRAM) industry and a man whose departure for China in 2015 was seen as a blow to Taiwan's semiconductor memory sector, left the Chinese company after completing a five-year term as executive vice president of global operations. The future of the Chinese chipmaker looks more worrisome after Kao's departure.
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