There’s a significant chunk of change earmarked for the semiconductor industry in China—an impressive $40 billion courtesy of a state-backed investment fund. That’s quite a progression, wouldn’t you agree? This achievement isn’t insignificant; it’s massive strides forward—like leaps and bounds—in their pursuit to decrease the tech proficiency gap they’ve got with the US and other international competitors”.
Poised to be the titan among three designated funds launched in the years 2014 and 2019, is an investment fund associated with China’s mighty Big Fund for Integrated Circuit Industry. When compared to earlier funds which successfully amassed hefty amounts, this one has secured a staggering figure of 200 billion yuan by the year 2019. This plainly outlines how China isn’t mincing its words when it comes to committing towards semiconductor advancement.
The machinery needed to make chips will be one of the main areas of investment. This objective is consistent with President Xi Jinping’s long-standing call for semiconductor self-sufficiency. After the U.S. implemented export control measures to limit China’s access to sophisticated chipmaking technology, raising doubts about its potential military applications, the urgency of this goal increased.
The Chinese government’s dedication to supporting its semiconductor industry is highlighted by the recent approval of the fund by Chinese officials. The Ministry of Finance plans to give the fund 60 billion yuan, but the identities of the other donors are unknown. All sources opted to remain anonymous because these interactions were private.
The Big Fund, which has previously provided financing to major players in China’s chip industry, including Semiconductor Manufacturing International Corporation and Hua Hong Semiconductor, has played a pivotal role in supporting the sector. However, despite past investments, China still faces challenges in becoming a dominant player in the global semiconductor supply chain, particularly concerning advanced chip production.
The fundraising process for this third fund is expected to span several months, with details about the fund’s management yet to be finalized. Nevertheless, SINO-IC Capital, the manager of the first two Big Fund funds, is expected to continue its role. Chinese officials have also engaged China Aerospace Investment to potentially manage the fund, reflecting the government’s commitment to building a robust domestic semiconductor industry.
China is determined to lessen its reliance on foreign semiconductor technology and to increase its technological ability on the international stage, as seen by this substantial investment. It also demonstrates the country’s desire to become a strong competitor in the semiconductor market.
