Tsinghua Unigroup Ltd., regarded as China’s biggest chip maker, is currently in talks with Hewlett-Packard Co. (HP) as it eyes to buy a stake in the firm’s data-networking operations in the country, chairman Zhao Weiguo stated.
In an interview earlier this week, Zhao revealed that an agreement is underway about his company's purchase of a 51-percent stake in H3C Technologies Co. The deal could amount to as much as $5 billion.
According to Zhao, whose rags-to-riches story has been renowned to many, what he offers to foreign firms is an opportunity to set foot on China's vast and lucrative market.
Zhao further clarified that Tsinghua is not under Beijing amid speculations because of high-profile political connections. He remarked: "Many people suspect I'm a 'white glove' for the government . . . but we're really just a very market-oriented company."
Recently, overseas-based companies are making agreements with Chinese firms to reach the world's most populous nation. The upsurge in such partnerships comes after a sales decrease due to increasing pressures from the country's capital city.
Chinese leaders are reportedly anxious about foreign product dependence of its consumers. The authorities also pointed out cybersecurity as an issue.
U.S.-based chip maker Intel Corp. has also become a partner of Tsinghua after acquiring a 20-percent stake worth $1.5 billion in 2014. In addition, Intel has also teamed up with Huawei Technologies for a cloud technology venture.
Meanwhile, International Business Machines Corp. also inked a contract with China's Inspur Group Ltd. in August last year. The year 2014 also saw Lenovo Group Ltd.'s purchase of IBM's economical server unit.
"A lot of this is driven by the Western side. If you're losing market share, how do you do something different? That's the only way these U.S. firms can expand in the market," Beijing-based Chris DeAngelis, general manager of Alliance Development Group, remarked.
The 48-year-old Zhao concluded that what Tsinghua has with HP is not fueled by any instructions from the government.
"I believe we are creating a new kind of model for U.S.-Chinese company partnerships," he stated.
Currently, Tsinghua is speeding up its chip business expansion. Chairman Zhao projected that the firm's revenue from this business could reach $1.8 billion, an increase from last year's $1.5 billion.
The company, which was founded in 1998, also eyes to hire 1,000 employees more by the end of the year.