Neil Bush’s Chinese semiconductor adventure has taken a turn for the worse. George W. Bush’s little brother made headlines back in 2003 when, during a nasty divorce from his then-wife Sharon, he admitted that he had a lucrative contract with Grace Semiconductor Manufacturing Corp., a new chipmaker in Shanghai with big ambitions to become a global power in silicon. The arrangement was a bit odd, since Bush had pretty much zero knowledge of chipmaking. But of course he did have important connections - and Grace was a company that paid a lot of attention to connections: One of the company’s backers was Jiang Mianheng, the son of China’s former president, Jiang Zemin.

According to the deal, Grace would pay Bush $500,000 in stock every year for five years. (At the same time, the lawyer of Bush’s ex got Neil to admit that, during business trips to Asia, the son of 41 and brother of 43 had sex with women who showed up at his hotel room. Bush denied knowing that they were prostitutes.) Back then, the Chinese semiconductor business was attracting tons of interest from people convinced that the country would become a chipmaking center, so receiving Grace shares seemed like a way for Neil to make some easy money. For instance, Grace's Shanghai rival, Semiconductor Manufacturing International Corp. (SMIC), had a $1.8 billion Nasdaq debut in 2004.

But building a chip industry from scratch in China is proving to be not so easy. Since SMIC’s listing, the semiconductor industry has gone tough times and SMIC's stock price has tanked: The U.S. listed shares, which debuted at 17.50 in March 2004, now trade at 7.57. That's a problem for Grace, since it and SMIC have similar business models. (They're both foundries, chipmakers that make chips for others.) On Feb. 17 Bloomberg reported that the company was delaying its IPO for a third time. The more Grace delays, the more its chances of becoming a significant global chipmaker fade, especially with foundry leader Taiwan Semiconductor Manufacturing Co. expanding into China itself.

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