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Wuhan District Government Took over Hongxin Semiconductor Company

Wuhan Hongxin Semiconductor, a failed example of the “Great Leap Forward” in the Semiconductor industry, was on the verge of bankruptcy. The Wuhan Dongxihu District Government recently took it over but made no change to the board members of the company. Wuhan Hongxin was reported to be a 128 billion-yuan (US$19.5 billion) project. It was established in November 2017. From the very beginning, it claimed that it owned the technology to make a 14nm chip, and will make a 7nm chip one year later. It also invited Chiang Shang-yi, former TSMC Chief Operating Officer, to be the CEO. In July of this year, the media report showed that Wuhan Hongxin was at risk of a capital chain rupture and payments to the subcontractors were delayed for months. In June, Chiang Shang-yi also submitted his resignation.

In recent years, there has been an upsurge to build semiconductor-related factories in different parts of China. However, one after another, the investment of tens of billions or even hundreds of billions in Jiangsu, Sichuan, Hubei, Guizhou, and Shaanxi, failed and the local governments who came up with the initial funding ended up taking them over. On October 20, a spokesperson from China’s National Development and Reform Commission said that they have noticed that companies with no experience, no technology, and no talent intend to invest in the chip industry. Some local governments are standing behind and push for the project. For projects that ended up with major losses and wasted resources, they must understand that “whoever supports the project should bear the full responsibility.”

Source: Central News Agency, November 17, 2020