Briefing: Shenzhen government takes 36% stake in chipmaker Tsinghua Unigroup

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Shenzhen government takes control of China’s leading chip maker Tsinghua Unigroup – SCMP

What happened: The southern Chinese city of Shenzhen will take a 36% stake in chipmaker Tsinghua Unigroup. Tsinghua Holdings, which is owned by Tsinghua Univesity, has agreed to transfer the stake to Shenzhen Investment Holdings—owned by Shenzhen’s government agency overseeing state assets. Tsinghua Holdings will retain a 15% stake after the transfer.

Why it’s important: China’s Communist Party policy formulation body released a guideline in May calling for greater supervision of school-affiliated enterprises, as well as increased separation between schools’ education and business operations. The move followed a campaign last year in which the Party’s corruption watchdog found that such companies posed “high corruption risks” and “mismanagement problems.” The government’s answer has been to transfer company stakes to government-owned investment platforms. It’s a big blow for the renowned university. Tsinghua Unigroup shipped 3.4 billion smartphone chips last year, making it the third largest mobile chipmaker in the world, according to company CEO Zhao Weiguo.