Semiconductor photo. Getty Image Bank
Wuhan Hongshin Semiconductor Manufacturing (HSMC), a Chinese semiconductor company that has declared that it will catch up with Samsung Electronics with an investment of over 20 trillion won, is undergoing liquidation procedures after three years of establishment.
However, the inner situation that is revealed one by one is very shocking. All of the founders of the company were outside the class of semiconductors, and the ’20 trillion investment’ was also false. The local government in China believed the company’s words and made an investment close to 3 trillion won, and then all of them were blown away. China’s’semiconductor drilling’ plan, which has invested more than 100 trillion won in budget over the past six years, is also being questioned.
HSMC made by 3 non-semiconductors
According to a foreign press on the 1st, Wuhan Hongshin Semiconductor Manufacturing (HSMC) recently requested that all 240 executives and employees leave the company because there is no plan to restart the company. In fact, it means that they will go through the liquidation procedure. It has been 3 years and 3 months since it was established in Wuhan, China in November 2017.
Media inside and outside China are accusing the whole story of the ancient scams, saying, “The Chinese government, which dreamed of becoming a semiconductor powerhouse in cooperation with private companies, has fallen victim to fraudsters.”
According to related reports, the three founding members of HSMC, Khaosan, Longway, and Li Xueyan, all have no knowledge of semiconductors. All three haven’t graduated from college, and Khaosan has all elementary school diplomas. Li Xieyen was a former restaurant owner.
However, the history was not a problem when they set up HSMC. Khaosan packaged himself as a semiconductor expert with business cards of’TSMC Vice President’ and’Acer (Taiwan-based IT company) New York Branch Vice President’ business cards. Khaosan is attracting investment from the Wuhan city’s Dongxihu District government, proclaiming that it has succeeded in attracting 20 trillion won in investment with a false history.
Visuals_ HSMC, a Chinese semiconductor company that fell in 4 years
HSMC was established on the condition that the Dongxihu District government owns 10% (200 million yuan) of the shares and 90% (1.8 billion yuan) of Beijing Guangliang Lantu Technology. However, Beijing Guangliang Lantu was only a paper company made by Khaosan, and Khaosan and others did not pay the promised 1.8 billion yuan. The company was founded only with government subsidies.
TSMC’s top engineer was once recruited
Nevertheless, they announced a blueprint that “after TSMC and Samsung Electronics, they will produce semiconductors with cutting-edge process technology below 7 nanometers.” In the market, pointed out, “I haven’t learned how to walk, but how do I fly?”
In April 2018, Chinese President Xi Jinping (left) tours the YMTC semiconductor plant in Wuhan. Shinhwa = Yonhap News
However, when TSMC’s chief engineer Jang Sang-i (蔣尙義) was recruited as Chief Executive Officer (CEO), the market’s evaluation changed. A large number of competent technicians rushed to work with Jang Sang-i. They even brought in cutting-edge semiconductor equipment from Dutch equipment company’ASML’, which puts strict standards on equipment sales. HSMC has received a total of 15.3 billion yuan (2,6952 billion won) in subsidies from the Wuhan government over the past two years.
The local government lost 2.6 trillion won… No investigation?
But soon a problem broke out. Since January of last year, HSMC has not paid for the construction of the plant in time, and various lawsuits have been followed. Even semiconductor equipment bought from ASML was taken as a bank mortgage.
As problems continued, Jang Sang-i left the company as if running away in June of last year. The Wuhan government soon officialized the fall of HSMC with a report saying, “The HSMC semiconductor project is stranded due to insufficient funds.” At this time, Khaosan and Longway (May 2019) had already stepped down. After taking over HSMC directly, Li Cheyen also fired.
The remaining problem is the whereabouts of the government investment of 15.3 billion yuan. I didn’t spend a lot of semiconductor equipment, but it was said that there was little money left. China Money Network pointed out that “there was a huge investment loss, but the authorities have not investigated this scandal.”
China’s’semiconductor roll’
The Hong Kong South China Morning Post pointed out that this is the latest case in which China’s ambition to realize semiconductor independence has been frustrated.
Samsung Electronics Pyeongtaek Line 2, the world’s largest semiconductor factory. Provided by Samsung Electronics
Recently, in China, unqualified companies have been shutting down after receiving only investment funds. Tsinghua Unigroup, which is regarded as a symbol of semiconductor prominence, faced a bankruptcy crisis as it failed to extend the maturity of corporate bonds worth 220 billion won.
Despite the fact that the Chinese government is spending enormous budgets, the results are still insignificant. The technology gap in the DRAM field with Korea is still 3-10 years behind. An official in the semiconductor industry said, “Semiconductors are difficult to complete just because they only cost money, and in fact, the 100 trillion won investment that China has put up is not very large.”
Kim Dong-wook reporter [email protected]
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