Sheepherder Turned Billionaire Eyes Micron to Build Chip Empire
July 16, 2015
Zhao Weiguo knew the only way to avoid a future raising pigs and herding sheep in rural China was education. Thirty years after enrolling in prestigious Tsinghua University, the billionaire is using the backing of his alma mater to build a technology empire.
Deals to buy chip designers, along with partnerships with Hewlett-Packard Co. and Intel Corp., have helped his Tsinghua Unigroup Ltd. assemble a business spanning cloud computing, mobile and semiconductors. Now the company is said to plan offering $23 billion for Micron Technology Inc. to take on Samsung Electronics Co. in the hotly-contested memory chip industry.
Tsinghua Unigroup’s acquisition spree comes as President Xi Jinping’s government tries to free China from a heavy reliance on foreign technology, with semiconductors seen as vital to national security. Zhao said his strategy is driven by the needs of building a sustainable business, rather than any political agenda.
“I am an entrepreneur. My main job is to manage well the operation of our enterprise,” he said in an e-mail to Bloomberg News, declining to comment on Micron. “Food should be eaten piece-by-piece. The road should be hit step-by-step. Our decisions will be combined with industry trends and Unigroup’s own conditions.”
His company, the investment arm of Tsinghua University, has announced more than $4 billion of acquisitions in the past two years, according to data compiled by Bloomberg. Tsinghua Unigroup hasn’t commented on Micron and the Boise, Idaho-based company said it has yet to receive an offer.
Zhao’s emergence as a tech billionaire is a long way from his birth in remote Xinjiang province in northwestern China, a region that borders Mongolia and Kyrgyzstan. His childhood home in a small village is closer to Kabul than Beijing or Shanghai.
“I raised pigs and herded sheep for living. I knew that only education could change my fate,” he wrote.
The 48-year-old paid his way through college by fixing televisions and writing computer software. After graduation, he found a job in Beijing’s Zhongguancun area, which has gained a reputation as China’s Silicon Valley with companies including Lenovo Group Ltd. and Baidu Inc. calling it home.
Tsinghua founded what later became Unigroup in 1988, acting as an investment arm of the university. In a 2010 privatization, a firm controlled by Zhao became Unigroup’s second-biggest shareholder after the university.
“Zhao Weiguo has his unique way for investments. When he targets a company, he considers it for a long time and then makes an offer very quickly,” said Gu Wenjun, chief analyst at iCwise, a Shanghai-based consulting company. “He has said that China lacks a memory chip business, so this is a chance here.”
While the potential takeover of Micron comes less than two months after Zhao cautioned that the valuations of Chinese chipmakers are becoming too expensive and entering a “serious bubble,” he rejected suggestions that he had changed his mind.
“I never changed my passion and determination for the chip business,” he wrote. “I like to choose positively, rather than passively accept.”
Tsinghua Unigroup said in February it received 10 billion yuan of state-backed funding over five years to invest in chip companies, while one of its affiliates agreed in May to buy control of Hewlett-Packard’s Chinese networking and server businesses for $2.3 billion.
Other deals from Tsinghua include the acquisition or RDA Microelectronics Inc. and Spreadtrum Communications Inc.
Zhao has amassed a fortune of at least $2 billion, according to the Bloomberg Billionaires Index.
He said he has already donated $100 million toward education and pledged the bulk of his fortune to his 104-year-old alma mater in Beijing, which counts Xi and former leader Hu Jintao among its alumni.
“Education has changed my life so I have passion for the education sector,” Zhao wrote in the e-mail. “I have promised to donate 70 percent of my personal wealth to Tsinghua University.”
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