Through Tsinghua Unigroup’s initiative to acquire the leading TD-SCDMA baseband chip vendor Spreadtrum Communications ( announced in July) and now China’s RF IC leader RDA Microelectronics ( disclosed earlier this week), hopes are running high in China that its domestic electronics industry might finally get a consolidated entity powerful enough to compete with Taiwan’s MediaTek, if not quite an equivalent to Qualcomm in the United States.

According to several sources in China’s electronics industry EE Times talked to this week, getting acquired by Tsinghua Unigroup is the most logical and probably the best option left for Spreadtrum, which needs to compete with MediaTek on the high-end smartphone business while fighting off RDA on the low-end of the market.

Further, consider that both Spreadtrum and RDA are “competing in a low end market where the profit is razor thin, and the market is declining,” one Chinese executive noted. “The consolidation of the two companies is a good thing for China electronics.” He expects to see this happen more in the future. The Chinese semiconductor industry, with a lot of smart people working but all of them competing on lower and lower margins, is not sustainable, he explained.

While many Chinese industry sources see the recent development positively, opinions differ about what comes next. Some Chinese executives view Tsinghua Unigroup’s move as “a pure financial play,” while others put more stock in a behind-the-scenes ploy by the Chinese government to strengthen China’s electronics industry. Others even go further, predicting a doomsday scenario for other Chinese fabless companies such as Allwinner and Rockchip.

About Tsinghua Unigroup
Little is known about Tsinghua Unigroup — especially in the West. When it comes to details of the group’s business and people involved in running the business, it’s not all that clear even in China, either.

Here are the basics. Tsinghua Unigroup is 51 percent owned by Tsinghua Holdings, a 100 percent state-owned limited liability corporation funded by Tsinghua University in China. Forty-nine percent of Tsinghua Unigroup is owned by private entity — Jiankun Investment Group Co., Ltd. — controlled by Zhao Weiguo.

Weiguo serves as Chairman and Chief Executive Officer of Tsinghua Unigroup.

According to one Chinese electronics industry executive, Weiguo is “playing the whole game by leveraging Tsinghua resources and getting enough bank loans for supporting this deal.” He called Weiguo “a real businessman and understands China economics/complicated politics and capital market very well.” In short, Weiguo is “somebody who can smell blood from thousands miles away.” He is set to make money investing in the high-tech sector, rather than the real-estate business, which isn’t looking good right now in China.