Chinese chip mogul Zhao Weiguo disappears

Zhao was a Communist Party posterboy for years, but recently criticised the way the Government operated

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Zhao was a Communist Party posterboy for years, but recently criticised the way the Government operated

Zhao Weiguo, one of China's most renowned tech tycoons, has mysteriously disappeared in the midst of the country's broadening influence in the semiconductor industry.

According to Chinese business website Caixin Zhao Weiguo, ex-chairman of the now bankrupt chip manufacturing behemoth Tsinghua Unigroup, has been 'out of touch' since mid-July after he was 'taken from his home' by officials.

Tsinghua Unigroup has been in the public eye since July 2021, when it announced that it would be unable to repay some of its huge debts.

Zhao transformed Tsinghua Unigroup into a sizable microprocessor company over his 13 years in command, from 2009 to July 2022, via mergers and acquisitions.

The company's assets increased from ¥1.3 billion ($192.7 million) in 2009 to a high of ¥297.8 billion ($44.2 billion) in 2019, making it China's biggest integrated microchip firm.

Between 2013 and 2019, the group spent enormous amounts of money buying more than 20 companies.

The aggressive expansion complied with government initiatives to reduce China's reliance on foreign chips.

Zhao consistently denied claims that he worked for the Chinese government and described Tsinghua Unigroup as a market-oriented enterprise.

Despite this, Beijing invested a significant amount of money in the organisation, which was also politically well connected.

Zhao is said to have been especially close to Hu Jintao, former Chinese president, and his son Hu Haifeng, who helped run Tsinghua Holdings.

However, tensions between Hu Jintao and China's current president, Xi Jinping, who assumed office in 2013, affected Zhao's ties with the Government.

Still, the firm received approximately $22 billion from state investors as late as 2017 to finance its acquisitions.

As the firm's debt pile grew, however, so did its political alienation. In late 2020, when Tsinghua defaulted on a domestic bond, its total obligations were estimated to be worth more than $31 billion.

In July 2021, Tsinghua Unigroup filed bankruptcy and the company's forced 'reorganisation' began: a reorganisation that ended just a few days before Zhao was detained.

It is possible that Zhao's removal from his home had something to do with his outspoken criticism of the restructuring of Tsinghua Unigroup, which he felt significantly devalued the firm.

Zhao was effectively ousted from the company in February.

The company said in a filing last month that it was now officially owned by new investors, including state-affiliated entities and private sector groups Wise Road Capital and Beijing Jianguang Asset Management.

Zhao's downfall is the most recent in a string of monumental failures that have affected a number of once-aggressive Chinese companies, including state-backed CEFC, travel-to-finance behemoth HNA, insurer Anbang, and financier Tomorrow Group.

He also (we suspect) joins other Chinese billionaires who, following their involvement in China's decade-long debt-fuelled purchase binge, have been imprisoned, mostly on corruption-related charges.

They include Xiao Jianhua, CEO of Tomorrow Group; founder of CEFC Ye Jianming, chairman of Anbang Wu Xiaohui, and HNA CEO Adam Tan; and - possibly, back in 2020 - Jack Ma, founder and CEO of Ant Group.