Chinese Regulator Accuses Chip Tycoon Zhao Weiguo of Corruption

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Facts

  • China's Central Commission for Discipline Inspection (CCDI) has placed Zhao Weiguo, the former chairman of computer chipmaker Tsinghua Unigroup, under investigation, alleging he "took the state-owned company he managed as his private fiefdom."1
  • The government invested billions in Tsinghua projects that ultimately stalled or failed, however the CCDI says Zhou provided his friends and family with successful businesses to run and paid "significantly above market prices" for their goods and services.2
  • The state-backed company, once part of the prestigious Tsinghua University — alma mater of Pres. Xi Xinping — had been one of China's leading chipmakers before it accumulated significant debt under Zhou's leadership and defaulted on several bond payments in 2020.3
  • Zhou, who the CCDI says will be charged by prosecutors, is among the more prominent names swept up in a recent series of corruption probes after the government dished out more than $100B to boost domestic chip production.4
  • The company completed a 20-month restructuring last July, around which time Zhou — who has reportedly been taken from his home by authorities for investigation — stepped down as chairman.1
  • China's corruption investigations come amid an escalating trade war with the US over semiconductors, which help power a broad range of technology from mobile phones to military hardware.2

Sources: 1BBC News, 2 Firstpost, 3 The Star, and 4The Standard.

Narratives

  • Pro-China narrative, as provided by Global Times. As Beijing looks to combat the US's semiconductor trade war, Zhou tried to take advantage of the growing industry and his state-backed company's profits. There is no room for such selfish corruption as this at a time when the nation is looking to defend itself economically and technologically against the encroaching western threats of sanctions and boycotts.
  • Anti-China narrative, as provided by The Register. As it can no longer rely on technology produced in the US, China is now discovering that throwing money at the chip industry will not be enough to rival the semiconductor production of its western counterparts. While these could be cases of legitimate corruption deserving of prosecution, the significant possibility that these executives simply fell out of Pres. Xi's favor as Beijing continues to flounder over the problem of chip production cannot be ignored.

Predictions