Company failed to develop processor despite receiving 100m yuan in grants A technology company is being investigated for allegedly misusing state funds and failing to make good on a promise to invent a computer processor in the wake of another scandal involving faked scientific research. The Ministry of Science and Technology was investigating the Beijing-based Arca Technology Corp, a privately owned firm, the 21st Century Business Herald reported yesterday. The investigation centres around Arca's failure to develop a central processing unit, considered a computer's brain. Company officials could not be reached for comment. The report said the project should have been completed in December 2003, but work was suspended. Officials discovered in June 2004 that the company had not used government funds as the contract stated and that the CPU prototype - the Arca III - did not meet technical standards. Arca developed what it claimed to be the country's first home-grown 32-bit CPU, known as Arca I, in July 2001 and then developed Arca II in December 2002. Both were hailed as milestones in China's technological development. The company started mass production of Arca II in 2003. Based on the fame of the Arca series, the company received support from the government and joined the country's '863 Plan', which provides policy preference and financial support for important scientific research activities. The newspaper estimated that Arca had obtained nearly 100 million yuan from the government, including 4 million yuan from the Ministry of Information Industry. But since 2003, Arca's chief executive, Li Delei, has said that the company stopped developing the CPUs because 'there is no market potential'. Some Arca staff said the real reason was a shortage of funds as the company had taken on too many projects at the same time. The company also built a 60 million yuan office building on 15,000 square metres of land in the Zhongguangcun Software Park, a hub of hi-tech companies in Beijing. Arca received financial support from the park for the complex. The report followed a government announcement earlier this month that the mainland's first homegrown chip was a fake. The scientist held responsible for the fraud, Shanghai Jiaotong University professor Chen Jin, was removed from his academic positions. Li Yiping, the chairman of Shanghai's Science and Technology Commission, yesterday declined to comment on the Chen case. But city officials announced plans to increase spending on scientific research and development despite the scandal. The central government launched a confidential evaluation of all projects under the 863 Plan after authorities found cases of fraud and falsification. Minister of Science and Technology Xu Guanhua was yesterday quoted by state media as saying the mainland must thoroughly investigate corruption in the field. 'The 863 Plan is the cornerstone of our country's hi-tech development,' Mr Xu said.
