Zhao Weiguo, the former head of an expansive Chinese conglomerate with state backing and deep investments in the global technology sector, has been placed under investigation by officials in Beijing, according to local media.The 54-year-old, who led cash-strapped chipmaking giant Tsinghua Unigroup for a decade, has been out of contact after being taken from his home by authorities in mid-July, reported Caixin, a Chinese business publication.The Financial Times has not independently verified the case. Tsinghua did not immediately comment. No further details on the investigation were provided.The report of Zhao’s detention follows years of intensifying scrutiny of state-backed Tsinghua by investors and the Chinese government after Zhao struggled to repay and refinance the company’s large debts.The company originated from Beijing’s Tsinghua University, China’s most prestigious engineering school, in the late 1980s. Zhao took control in 2009. He climbed from obscurity herding animals in Xinjiang, China’s western region, to study at Tsinghua in the 1980s. He went on to make a fortune in property and forged ties with senior members of the Chinese government.Zhao especially benefited from state support during the administration of Hu Jintao and is believed to maintain a close personal relationship with the former president’s son, Hu Haifeng, according to analysis by Cercius Group, a Montreal-headquartered consultancy specialising in elite Chinese politics. Zhao has denied ties to Hu Haifeng.His standing with Beijing has been clouded by tensions between Hu Jintao and China’s current president Xi Jinping, the country’s most powerful leader in a generation. Still, as recently as 2017, the group secured about $22bn from state investors to fund its computer chip acquisitions.But Tsinghua defaulted on a domestic bond in late 2020. Its total liabilities were estimated at more than $31bn. The default shocked investors given the company’s ties to the Chinese state, and it entered a court-ordered restructuring last year. Under Zhao, the company bought French chipmaker Linxens and took a majority stake in data networking business H3C from Hewlett-Packard. Attempts at multi-billion-dollar acquisitions of US tech groups Micron Technology and Western Digital failed.But following years of uncertainty over its future, the company said in a filing this month that it was officially under the ownership of new investors including private sector groups Wise Road Capital and Beijing Jianguang Asset Management, as well as a number of state-affiliated funds. Taiwan’s Foxconn, an Apple supplier and tech assembly giant, has taken a stake in the group via Wise.Zhao’s downfall also marks the latest in a series of epic corporate collapses among a clutch of previously aggressive Chinese dealmakers, including state-backed group CEFC, insurer Anbang, travel-to-finance conglomerate HNA and financier Tomorrow Group.Some of the highest-profile billionaires behind China’s debt-fuelled acquisition spree of the past decade have been subsequently jailed or detained, usually on charges relating to corruption.
They include CEFC founder Ye Jianming, Anbang chair Wu Xiaohui as well as HNA chair Chen Feng and chief executive Adam Tan and Tomorrow Group boss Xiao Jianhua.While many of the tycoons chased foreign property and other prestige acquisitions, Zhao’s investments more closely tracked one of Beijing’s core industrial policy ambitions: for China to be free from its dependence on foreign-made computer chips.Several of China’s most promising chipmaking groups are in Tsinghua’s stable, including Yangtze Memory Technologies, which aims to rival South Korea’s Samsung and SK Hynix in memory chips.YMTC, which was founded in 2016 and enjoys state backing, has already more than tripled its production to nearly 5 per cent of the global market. However, the Wuhan-based company has caught the attention of the Biden administration, which is probing whether it supplied Huawei with chips in a potential violation of US export controls.