China has seen some eyebrow-raising investments in its semiconductor industry by traditional firms amid tightening US trade sanctions.
Home appliances vendor Gree Electric, shoe manufacturer AoKang International, and rare metal entrepreneur Shi-hui Zhu have made moves in recent years to expand into the semiconductor sector through acquisitions, vertical integration, or supply chain extensions. Their reach has extended to memory, SiC power devices, and upstream semiconductor materials.
The moves by these semiconductor "laymen" have been seen as part of the aggressive attempts by China to counter the US chip restrictions, according to industry observers.
Semiconductor "laymen"
Zhu, a major player in China's rare earth sector, has recently taken a controlling stake in semiconductor firm Wanye Enterprises through the Vital group that he founded. Wanye has diversified from real estate into semiconductor equipment and materials.
Zhu is seeking to build a comprehensive semiconductor ecosystem leveraging his experience in rare earths. Gree founder Ming-zhu Dong has also been keen on gaining a major role in the semiconductor industry, the observers added.
Gree has already made progress in developing SiC components. In 2018, Gree set up a fully owned subsidiary, Edgeless, in the southern Chinese city of Zhuhai, with the specific goal of developing controller chips and power devices supporting the parent company's production of air conditioners and other home appliances.
In 2019, Gree invested CNY2 billion (approx. US$274 million) in Sanan Optoelectronics to become its fourth largest stakeholder.
Sanan is the leading LED maker in China, with substantial economies of scale in compound semiconductors. Gree is looking to collaborate with Sanan in various sectors, including central air conditioning, smart equipment, precision molding, solar power, and energy storage, the observers said.
In 2023, Gree kicked off a SiC chip fab construction project in Zhuhai, with investment totaling CNY5.5 billion. With 6-inch SiC chipmaking, packaging, and testing lines, the fab became operational in June 2024, marking a major step of Gree's foray into compound semiconductors, the observers said.
It remains to be seen whether Gree's rich experience and resources gained from the home appliances market can help it succeed in the semiconductor industry, where the investment cycle is typically long.
Semiconductor as a cure-all?
Shoemaker AoKang's venture into semiconductors has been the most puzzling. It has already acquired some stakes in United Memory Technology (UMT). Founded in Wuxi, Jiangsu Province in 2021, UMT supplies memory chips and solutions.
Without any experience in semiconductors, AoKang hopes a business transformation can help turn the ailing company around, the observers said. The company has accumulated a loss of almost CNY576 million in 2022-2023. The key is whether AoKang can build a competent team to manage the semiconductor business, which has a high technological entry barrier.
Gree may stand a better chance because it targets the demand within its own business group, and the technology required for making controller ICs and SiC power devices is quite mature. Gree should be able to gain control of the supply chain to support its strategy of vertical integration, the observers added.
Article translated by Rodney Chan
