China is getting ready to launch a new state-backed investment fund with the goal of raising approximately $40 billion for its semiconductor industry as the nation steps up efforts to catch up with the United States and other rivals.
The China Integrated Circuit Industry Investment Fund, often known as the Big Fund, opened three funds; this one is believed to be the largest. In comparison, similar funds in 2014 and 2019 raised 138.7 billion yuan and 200 billion yuan, respectively, according to government reports. Its objective of 300 billion yuan ($41 billion) exceeds those years’ totals.One of the major investment areas will be machinery for chip fabrication.
For a long time, President Xi Jinping has emphasized how important it is for China to become self-sufficient in semiconductors. This need has grown even more urgent because Washington has implemented a number of export control regulations over the past few years, citing concerns that Beijing would exploit cutting-edge technology to improve its military prowess.
In October, the United States unveiled a comprehensive package of penalties that restricted China’s access to cutting-edge chip manufacturing machinery. U.S. allies Japan and the Netherlands also took similar action. Chinese authorities have just approved the new fund. The Chinese finance ministry intends to provide 60 billion yuan. Other contributors weren’t immediately identifiable.
INVESTMENTS MADE SO FAR
The fundraising process will probably take several months, and it is not yet known when the third fund will be formed or whether there will be any additional alterations to the plan. The finance ministry and wealthy state-owned companies, including China Development Bank Capital, China National Tobacco Corporation, and China Telecom, supported the Big Fund’s first two funds.
The Big Fund has financed a number of smaller businesses and funds over the years in addition to China’s two largest chip foundries, Semiconductor Manufacturing International Corporation and Hua Hong Semiconductor, and flash memory manufacturer Yangtze Memory Technologies.
VENTURE MANAGERS
The Big Fund is thinking of engaging at least two institutions to manage the capital of the new fund. China’s anti-graft bureau has been looking into a number of senior officials and former officials at SINO-IC Capital, the sole manager of the Big Fund’s first two funds, since 2021.
Nevertheless, SINO-IC Capital is anticipated to continue serving as one of the third fund’s managers.
Chinese authorities have also contacted China Aerospace Investment, the investment division of the state-owned China Aerospace Science and Technology Corporation, to enquire about becoming one of the managers.
