The “core dream” on the mainland has not only exploded in a wave of bad news, with trillions of dollars of investment going down the drain, but is now also being mocked as a hotbed of semiconductor fraud. The Japanese media reported that the sensational Wuhan Hongxin Semiconductor (HSMC) claimed to have recruited TSMC engineers and boasted of acquaintance with senior Chinese Communist Party officials, and even claimed to have bought a coveted lithography machine from ASML, but now the 15.3 billion yuan investment amount to July 2020 after the Wuhan municipal government took over, but the account left 10 million yuan, “where did all the money go? Everyone wants to ask.
The Nikkei Shimbun reports that the Chinese Communist government Dreams of establishing ambitions as a national champion in the semiconductor industry, and local governments have followed suit, eager to support private companies that make chips, even if the less reputable ones don’t care, with many of these projects going bankrupt within a few years after receiving millions of dollars in investment from government agencies.
One of the most notable cases is Wuhan Hongxin Semiconductor (HSMC), a company that received strong support from the Wuhan East Lake District government and was formed in November 2017 by the Wuhan East Lake District government and Beijing Guangfang Blueprint Technology, with Cao Shan as the company’s registrant. Cao promised to invest RMB 1.8 billion for a 90 percent stake in HSMC, while the Wuhan city government contributed RMB 200 million.
When Cao met with potential investors, he introduced himself as a vice president of TSMC or vice president of Acer’s New York office, and boasted of having “connections” with senior Communist Party officials, according to the report.
Hongxin insiders say that Cao Shan brought in Long Wei as chairman of the board and, with his help, secured the Wuhan government’s investment. Long later installed Li Xueyan, so that the founding team of Hongxin was completed, with Long Wei as chairman, Cao Shan as director, and Li Xueyan as director and general manager.
However, Cao Shan’s promise to invest RMB 1.8 billion was never fulfilled. Meanwhile, after receiving two capital injections in January and March 2019, Hongxin received an additional investment of RMB 8 billion from the Wuhan City East Lake District Government.
This is just the tip of the iceberg, as Chinese Communist media outlet 36 Krypton (36Kr) discovered that Cao Shan is not the real name of Hongxin’s founder. Cao is actually Bao Enbao (pronounced, Bao Enbao), who borrowed the name of a Family driver. Absurdly, Cao Shan only graduated from elementary school and lacks the technical expertise needed for semiconductor wafers.
Cao’s suspicions did not stop Hongxin from becoming a star project in Wuhan and Hubei province, the newspaper said, adding that it remains a mystery how Hongxin managed to attract suppliers by branding itself as a $20 billion investment project.
Chiang Shang-Yi, TSMC’s former co-chief operating officer and the man who was heavily hired by Wuhan Hongxin as its CEO, also quit the Wuhan Hongxin team after it began defaulting on RMB 41 million in project payments last year. In an interview with the South China Morning Post, Jiang’s father had said, “My experience at Hongxin was a nightmare.”
On July 30, 2020, local officials announced that Hongxin’s project could not continue due to the overwhelming funding gap. Since then, authorities have taken over the botched project, absorbed the losses and stopped talking about it, and the billions of RMB in public funds invested in Hongxin remain unresolved.
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