Meet the Investor Bailing Out China’s Chip Industry
The private equity investor Li Bin is little known outside China’s clubby finance and semiconductor circles. But Li’s biggest bet yet—a $9.5 billion bailout of Tsinghua Unigroup—will make him a central figure in China’s efforts to turnaround its struggling domestic chip industry.
Last month, executives from two Chinese private equity firms hunkered down in a conference room at the Beijing headquarters of Tsinghua Unigroup. Once a star of China’s plan for semiconductor supremacy, Unigroup last year began choking on its own debt, filing for bankruptcy last July, and a government-led group had selected the two firms over 20 other proposals to bail out the conglomerate for $9.5 billion.
Over the course of the three-hour meeting, Li Bin—the low-key, well-connected financier behind both private equity firms—quizzed presenters from one of Unigroup’s key business units about their revenue forecasts and other data, according to a person who was present. He had good reason to probe them. The pending deal is Li’s biggest gamble yet. His firms have spent at least $9 billion over the past few years snapping up overseas assets from foreign chip companies or launching China-based joint ventures with them.
Li’s international acquisitions over the years have demonstrated China’s determination to build a more competitive semiconductor industry at home. One of the two private equity firms he manages, JAC Capital, is 51% owned by China’s largest sovereign wealth fund, while he majority-owns the other firm, Wise Road Capital, according to Chinese corporate records. But most recently, Li’s overseas ambitions have run into huge obstacles because of growing tensions between Washington and Beijing. Geopolitics have already thwarted one of his deals: In December, a U.S. agency squelched his $1.4 billion bid for Magnachip Semiconductor Corp., a South Korean company that makes power management chips for Apple and other customers’ devices.
