WDC Western Digital Corporation

BEIJING—Tsinghua Unigroup Ltd. plans to plow more than $12 billion into a new memory chip plant and semiconductor acquisitions, as the Chinese state-owned company continues a drive to build a globally competitive chip maker.

Months after an unsuccessful effort to acquire U.S. memory chip maker Micron Technology Inc., Tsinghua Unigroup will build a memory chip factory and make further acquisitions through a newly acquired subsidiary, Tongfang Guoxin Electronics Co., according to a Tongfang Guoxin filing on the Shenzhen stock exchange Thursday.

The investments will be Tsinghua Unigroup's latest in a buying spree this year. They come as China's leaders have made it a national priority to reduce the country's dependence on western technology and build domestic technology champions.

"The integrated circuit sector has obtained strong support from national policy," said Tongfang Guoxin in the filing, in discussing its reasons for building the plant.

"Guoxin" means "national microchip" in Chinese.

Tongfang Guoxin said in the filing that it will raise 80 billion yuan ($12.6 billion) in a private placement, with the majority of the funds coming from Tsinghua Unigroup and an investment company controlled by Tsinghua Unigroup's chairman Zhao Weiguo.

Unlisted Tsinghua Unigroup announced Monday it would buy a controlling 36.4% stake in Tongfang Guoxin, a listed sister company in the same influential state-owned conglomerate Tsinghua Holdings Co. But Tsinghua Unigroup's and Mr. Zhao's combined share of Tongfang Guoxin will climb to around 88% after the private placement, just shy of the 90% threshold that would require delisting from the Shenzhen stock exchange, two people familiar with the deal said. The transaction consolidates two chipmaking rivals within Tsinghua Holdings.

Of the new funds, 60 billion yuan will go toward a new memory chip plant, and 16.2 billion yuan toward acquisitions "upstream and downstream in the microchip supply chain." The remaining 3.8 billion yuan will go toward Tsinghua Unigroup's purchase of a 25% stake in Taiwan's Powertech Technology Inc., which was announced on Friday.

Tsinghua Unigroup has been active as of late. In October, it hired Charles Kau, the head of Taiwan memory chip maker Inotera Memories Inc., a joint venture between Micron and Taiwan's Nanya Technology Corp. The company struck a deal in September to buy a 15% stake in U.S. disk drive maker Western Digital Corp. It acquired a controlling stake in Hewlett-Packard Co.'s China networking gear unit earlier in the year.

Write to Eva Dou at eva.dou@wsj.com

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(END) Dow Jones Newswires

November 05, 2015 12:45 ET (17:45 GMT)

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