(Yicai Global) July 18 -- Electronic component producer Unigroup Guoxin Co. [SHE:002049], an A-share listed subsidiary of Tsinghua Unigroup Ltd., has decided to terminate its plan to acquire some or all of Yangtze Memory Technologies Co.'s shares, as the target company cannot generate income in the short term.

Yangtze Memory Technologies is the main group implementing China's national memory chip base project. The firm's memory chip plant requires significant investment, and the project is still in the initial stage of construction, so it will not generate revenue soon, Unigroup Guoxin said on July 16. The Tangshan-based firm said that it has decided to abort the equity purchase after careful deliberation.

Hubei Unigroup Guoqi Technology Holdings Co., another Tsinghua Unigroup affiliate, has a 51-percent stake in Yangtze Memory Technologies. Unigroup Guoxin had said on February 20 that it intended to merge with the memory chip producer.

Unigroup Guoxin's decision to pull out of the reorganization deal will not have any impact on plant construction, operation or development, a source at Yangtze Memory Technologies said yesterday.

Construction of the national memory chip base began on December 30, 2016, and Yangtze Memory Technologies has advanced the project according to schedule since then, the source said. Tsinghua Unigroup will continue to invest in Yangtze Memory Technologies to ensure successful completion of the national project.

Unigroup Guoxin hit the lower limit after trading on the A-share market resumed yesterday. It closed at USD4.10 (CNY27.74).

Construction of the first phase of the national memory chip base project is slated to wrap up next year, and the entire project will end in 2020. The facility's total production capacity will reach 300,000 chips a month, and annual output is expected to be worth more than USD10 billion.