A selloff in dollar bonds issued by two Chinese university-backed companies has revived concerns about the finances of such firms, as well as the strength of state support.
In the past week, investors have dumped dollar debt issued by subsidiaries of Tsinghua University and Peking University, the country’s top two tertiary institutions, pushing prices to record lows.
The financial woes affecting the two companies, one of them a leading semiconductor producer, highlight the risk arising from the murky regulatory oversight of a relatively obscure corner in China Inc.
The plunge shows a worrying loss of confidence for companies such as Tsinghua Unigroup Co., which is tasked with helping President Xi Jinping achieve his goal of challenging the U.S.’s global dominance in technology.
“Chinese companies are offering two to three times [Taiwanese engineers’] current salaries to work for them,” said an unnamed Taiwanese engineer in a recent interview with Japanese media Nikkei.
In August 2018, Taiwan’s Central News Agency reported that Nanya Technology, a Taiwanese maker of DRAM chips, lost 48 of its senior experts to China in less than two years. DRAMs are semiconductor memory chips within digital products that store data.
Inotera Memories, another Taiwanese DRAM maker, saw 400 of its employees leave for China after the company was acquired by U.S. tech company Micron in 2016.