The next Huawei? TCL Technology to launch a semiconductor subsidary

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TCL Technology launches semiconductor design subsidiary with $77 million investment.
Image: YouTube | TCL ELectronics

TCL Technology, a Chinese display panel manufacturer, announced plans to enter the semiconductor industry by founding a chip design subsidiary.

The corporation is interested in creating a ¥1 billion ($153.9 million) registered capital fund to support the unit. It also wants to find a partner that can cover half of the new company’s launch costs.

As it happens, the firm’s resources and position make it a candidate to step into space previously occupied by Huawei.

TCL’s Interest in the Semiconductor Industry

According to Gizmochina, TCL has already outlined some plans for its forthcoming chip-making unit. It will be named TCL Semiconductor Technology Co., Ltd. and will initially operate using a fabless manufacturing model. However, its parent company wants it eventually to establish some of its own production capacity.

The corporation wants to fabricate ICs with applications in the electric vehicle (EV) and connected retail segments.

TCL plans to create automotive power management components because of the field’s immense growth potential. Its goal to establish a foothold in that area makes sense as worldwide EV sales jumped by 39 percent in 2020. In addition, Canalys, an analytics group, estimates purchases of battery-powered vehicles in China will rise by 50 percent this year.

It is worth noting that the corporation’s current offerings do not include anything related to personal or commercial ground transport.

On the other hand, TCL’s desire to make electronic parts for smart terminals better aligns with its current output. The firm sells a wide selection of connected television sets, so it has experience working with miniaturized panels and display drivers. It could harness that expertise to break into its domestic retail electronics market.

The Next Huawei?

With enough funding, strong leadership, and some luck, TCL could evolve into the next Huawei.

In the early 1990s, Chinese electronics giant Huawei found a fabless chip-making subsidiary called HiSilicon to supply it with ASICs. Back then, its parent company made most of its money manufacturing affordable but high-quality telecommunications equipment.

Eventually, HiSilicon developed handset SoCs and modems with performance metrics that rivaled Apple and Samsung’s flagship products. Its lineup also came to include leading-edge data center, AI acceleration, and self-driving car components.

However, Huawei ran into a series of regulatory problems that have made its future uncertain. Its recent challenges have created an opportunity for another company to step up and assume its position within the marketplace. Though its path would not be easy, TCL could be that business.

Like Huawei, it is a technology corporation looking to expand into emerging industries. It is on an upward trajectory generating ¥76.7 billion ($11.8 billion) in revenue last year, a 33.9 percent increase from its 2019 income. Its recent success could make it more appealing to venture capital firms interested in taking advantage of the recent digitalization trend.

TCL’s status and positive brand identity could also help it secure funding from Beijing. Last month, the Chinese government declared its intention to create a $327 billion domestic semiconductor ecosystem by 2023. If its leaders can conceive of the right strategy, the corporation could be part of that initiative.

Chairman Li Dongsheng said he would seek federal capital for his organization at this year’s Two Sessions conference. If he is successful, TCL could be well on its way to becoming a regional tech giant fairly soon.

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