Huaxia Chip was a rising star among China’s original computer processor intellectual property (IP) designers. However, despite a voracious appetite for all things IT, the company now appears to be bankrupt and set to be liquidated. Obviously, something must have gone wrong, and machine translations of various Chinese news reports hint that the courts will find “dishonest persons subject to execution.” Don’t worry though, as we looked more carefully at the original wording and translations, and the people involved will more likely face consequences such as equity and trading freezes – nothing fatal.
It is highly likely that China’s Huaxia Chip was an important part of the country’s homegrown computer chip industry. It claimed to have completely independent intellectual property rights to CPU, DSP, GPU, and AI processor IPs. That is a bold and expansive claim, but its specialism seemed to be in robotics, edge, IoT, and cloud computing fields. Huaxia was placed in the top five Chinese innovative IC design companies in the 2020 China IC Design Achievement Award and it won the 2020 Hard Core China Chip Most Potential IC Design Enterprise Award.
The firm maintained its headquarters in Beijing and R&D and sales centers in Shanghai and many other China tech hub locations. However, looking at its English-language website, the company became relatively quiet after 2018.
With all the above in its favor and China thirsty for homegrown tech in the face of ratcheting U.S. sanctions, it is hard to understand how Huaxia Chip fell from grace. The source reports and court statements aren’t very enlightening. Huaxia seems to have folded after being challenged by Xi'an Jiubufang Enterprise Management Partnership's lawsuit. We know that, for years, an alleged graft scandal has plagued Chinese business development, and juicy government-backed investment funds targeting the semiconductor industry are ripe targets. However, we don’t have enough information to say for sure if such underhand business practices were to blame for the bankruptcy of Huaxia.
Reading the various reports, people involved in Huaxia’s business seem to be under close scrutiny, have had their assets and equity frozen, and will not be able to trade stocks. We guess this could change subject to the outcome of the court case. Huaxia Chip looks set for liquidation, and the government will probably be keen to get this process over with ASAP, as the firm holds more than 100 patents which could be important to the country’s semiconductor and chip development hopes.
