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China’s $ 2.8 billion semiconductor project comes to a dead end, backed by the Chinese government but can’t afford to pay staff salaries.

According to Asia Nikkei, Tacoma Semiconductor Technology was recently asked by the Intermediate People’s Court of Jiangsu Province (China) to proceed with the asset sale process, after it filed for bankruptcy in court. . Notably, four years ago, Tacoma Semiconductor Technology kicked off a memory chip production project worth up to US $ 2.8 billion and backed by the Chinese government.

Supported by the Nanjing Economic and Technology Development Zone, this project was first launched in 2016. According to Asia Nikkei, the Nanjing project is part of China’s ambitious plan, when the billion-nation nation aims to produce 70% of semiconductor demand by 2025.

The Nanjing city government invested nearly 55 million dollars in Tacoma Semiconductor Technology, but the company did not deliver on its promise.

Under the original plan, Tacoma Semiconductor Technology will build an 8-inch wafer manufacturing plant, and support other manufacturers throughout the chip production chain.

With such special importance, this plan has received great support from the Chinese government, as well as attracting enthusiastic response from both domestic and foreign investment funds and venture capitalists. .

However, Tacoma’s planned plant construction has been halted since March 2019 due to capital problems, according to Tacoma Chairman Li Ruiwei himself, also known as is Joseph Lee.

By the time the project was postponed, this plant had already completed about 90% of its construction schedule. According to a disclosure from Li Ruiwei, the Nanjing city government invested 384 million yuan (US $ 54.9 million), but Tacoma’s failure to attract other investors led the project to be halted.

Earlier, when Li submitted the project to the Nanjing city government, the president of Tacoma had promised that the business would not need to receive investment from the government. Instead, Tacoma will try to find outside investors, according to a source close to the business disclosed to Caixin. However, at the ground-breaking ceremony of the project in 2016, Tacoma has not been able to mobilize external funding as planned.

“The idea was to both work on the project and find the money,” the source said.

Accordingly, Tacoma has selected Israeli chip manufacturer, TowerJazz, as its partner. The Nasdaq-listed company specializes in manufacturing wireless telecommunications chips and camera sensors, with major customers including Intel and Texas Instruments.

As planned, TowerJazz will not invest or contribute money for Tacoma’s project. Instead, the company primarily plays a technical advisory role. Tacoma paid TowerJazz $ 30 million under a technology licensing agreement. As for TowerJazz, the company also promises to order up to 50% of the 40,000 wafers produced by Tacoma every month.

Li has also approached other investors, including Hubei Technology Semiconductor Company, JAC Capital and Peng Capital, but has not made any progress in raising capital.

Due to its inability to pay its employees, Tacoma was listed as insolvent entities and sanctioned by the Chinese government in late 2019. Currently, Nanjing Economic and Technology Development Zone has been There are plans to call on new investors to complete the construction of the plant and take advantage of the project’s technology and other assets.

References Asia Nikkei

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