(MENAFN) China's anti-fraud watchdog has accused Zhao Weiguo, the former chairman of computer chipmaker Tsinghua Unigroup, of corruption. The regulator alleges that Mr Zhao "took the state-owned company he managed as his private fiefdom," handing profitable businesses to his relatives and friends, and purchasing goods and services from companies managed by his associates at "prices significantly higher than the market". The case has been handed to prosecutors who will file charges against him.
Tsinghua Unigroup was once a branch of the prestigious Tsinghua University and, over the last decade, emerged as one of China's leading chipmakers. However, it racked up debt under Mr Zhao's leadership and defaulted on several bond payments in 2020. The company completed a 20-month restructuring last July, placing it under the control of a consortium led by two state-backed venture capital firms. Mr Zhao stepped down as the chairman of Tsinghua Unigroup around that time and was reportedly taken from his home by authorities for investigation.
The investigation into Mr Zhao is the latest sign of trouble faced by China's semiconductor industry. Last year, key players in the sector were investigated for corruption after the government poured billions of dollars into projects which stalled or failed. Several other leading figures in the Chinese semiconductor industry have also been placed under investigation.
Semiconductors are at the centre of a bitter dispute between the US and China, with Washington announcing in October that it would require licenses for companies exporting chips to China using US tools or software, no matter where they were made in the world.
While China's semiconductor industry has made significant strides in recent years, the allegations of corruption and debt problems at Tsinghua Unigroup highlight the challenges facing the sector. The industry is crucial for the country's technological development and its ability to compete with other global powers. As such, the government will likely continue to pour resources into the sector, but it will need to address issues such as corruption and debt if it hopes to achieve long-term success.
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