Gree Electric Appliances, China’s leading manufacturer of air-conditioners, recently announced that it would be investing $160 million in the establishment of a company for chip research and development. According to data published on the National Enterprise Credit Information Publicity System, the new company will be called Zhuhai Zero Border Integrated Circuit Co. Ltd.
Reliable reports cite that Dong Mingzhu, president of Gree Electric Appliances, will chair the new company. Gree has been considering the establishment of a new subsidiary for the last three years and since 2017, the company had stopped distributing dividends to shareholders by means of amassing funds to start the new company.
For the uninitiated, the manufacturing of chips has long been shunned by Chinese businesses due to the high technology barrier. But as companies are striving to reduce reliance on imported chips, more Chinese businesses are inclined to invest in the semiconductor space. Blockchain Chinese miner makers such as Bitmain and Cannaan Inc have in fact, previously announced the manufacturing of AI chips.
Gree reports that it spends approximately $640 million annually to import chips that are not produced domestically but are essential in electronic appliances like air conditioners. Gree is hoping that its venture into chip manufacturing will reduce the reliance of the industry on imported chips. Reportedly, Gree has already designed its own chip and is presently investing in manufacturing research.
According to public data released by the company, the business scope for Gree’s new venture will cover design and sales of integrated circuits, electronic components, semiconductors, chips and electronic products as well as development and sales of IoT technology, communication technology, computer software, embedded software and mobile device software. It will also cover import, export and wholesale of products.
However, experts are of the opinion that it will not be realistic for Gree to manufacture chips as it has no competitive advantage in this area, takes billions of dollars of investment and almost decades to receive ROI in chip manufacturing.