Home appliance maker's new arm to focus on smart component R&D

Gree Electric Appliances Inc, a major home appliances maker based in Zhuhai, Guangdong province, has set up a subsidiary focused on the design, development and sales of computing chips, according to the local industrial and commercial authority.

A source with the Zhuhai Municipal Industrial and Commercial Bureau indicated that the subsidiary, registered with capital of 1 billion yuan ($146 million), will also focus on research and development of semiconductors, integrated circuits, electronic devices and components, as well as other electronic products and services.

"The subsidiary will be mainly engaged in design of chips for air conditioners," said Wang Jingdong, vice-president of Gree.

Gree's sales of air conditioners for home use remained the highest in China for a 23rd consecutive year in 2017, and its commercial air conditioner sales were the highest for the sixth year running, according to its annual report.

The company's business revenue last year increased 36.92 percent year-on-year to 148.29 billion yuan, while total assets rose 17.87 percent to 215 billion yuan.

While maintaining rapid growth in its main business last year, the company also expanded its smart equipment, smart home appliance and new energy businesses, according to the report.

In an earlier interview with China Daily, Dong Mingzhu, the company president, said Gree's future development relies heavily on core technology R&D.

"Our future development relies on cutting-edge technologies, including in the chip sector. Gree's business will move beyond the air conditioning industry, with varieties of smart products to be unveiled in the market," she said.

According to Dong, Gree spends 4 billion yuan on buying chips each year to support its manufacturing of air conditioners.

"We need to change the situation by developing our own chips," said Dong.

Gree's efforts in making chips will target high-end variable-frequency drive systems, he said.

High-end chips used in air conditioners produced on the Chinese mainland are usually shipped in from the United States, Europe, Japan and Taiwan island.

Gree unveiled its industrial blueprint during its annual shareholders meeting in June, including air conditioners, high-end equipment, home appliances and telecommunication equipment.

The chip business, along with the internet of things, smartphones and big data, are included in its telecommunication equipment business, according to Gree.