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Chinese chip maker goes under after receiving $20B in investments

China's Hongxin Semiconductor Manufacturing Co. in Wuhan has stopped construction after receiving billions in investments. The firm has declined to provide an explanation for the situation. File Photo by Stephen Shaver/UPI
China's Hongxin Semiconductor Manufacturing Co. in Wuhan has stopped construction after receiving billions in investments. The firm has declined to provide an explanation for the situation. File Photo by Stephen Shaver/UPI | License Photo

Sept. 3 (UPI) -- A Chinese semiconductor manufacturer that was able to procure nearly $20 billion in investments has gone under, abandoning a new factory in Wuhan without explanation, according to a Shanghai-based news service.

Wuhan Hongxin Semiconductor Manufacturing Co., which recently said it was not aware of any financial problems, had claimed it would soon be capable of producing 7-nanometer chips. Only South Korean firm Samsung Electronics and Taiwan's TSMC are capable of mass-producing the chips.

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China Business Network reported Wednesday the company, which partly built some of its factories in Wuhan, had promised investors, including the Chinese government, that it would be capable of manufacturing 7- and 14-nanometer chips. HSMC's chief executive is Taiwanese national Chiang Shang-yi, a former chief operating for TSMC.

From 2018 to 2019, HSMC was able to amass more than $18.7 billion in investments from the Chinese government and other investors based on those claims. The firm had also said it would be able to produce 60,000 wafers annually.

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The Chinese government may have approved its investment in the firm as part of its policies. Beijing's Made in China 2025 Plan seeks to upgrade the nation's industries and achieve independence in the area of aerospace, semiconductors and biotech.

CBN reported the Wuhan factory site remains unfinished, with three skeletal structures seen in an area that was described as the equivalent of 59 soccer fields.

Construction may have been suspended because HSMC stopped paying its builders. Sources told CBN workers' salaries have not been paid for eight months.

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China's pursuit of semiconductors that rival South Korea or Taiwan continues in 2020. In July, Beijing began to offer a 10-year corporate tax break for firms that could produce chips of 28 nanometers or smaller, according to the South China Morning Post.

South Korean television network SBS reported in August Chinese companies have been recruiting South Korean engineering talent to realize its goals, including in the area of OLED display technology. South Korean TV makers hold the dominant position in the market.

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