China has unveiled a massive $48 billion fund aimed at boosting its chip industry and closing the technology gap with the U.S. This move comes in response to restricted access to advanced semiconductors and chip-making equipment worldwide.
The newly established semiconductor fund, totaling 344 billion yuan ($47.49 billion), is China’s largest ever and marks the third phase introduced by the China Integrated Circuit Industry Investment Fund. This amount is twice the total raised in previous phases in 2014 and 2019.
The fund’s shareholders include China’s Ministry of Finance, holding a 17% stake, and five major Chinese state-owned banks with approximately 6% stakes each. This fund’s registration on Friday signals China’s commitment to developing a robust local semiconductor supply chain.
The initiative follows a series of U.S. restrictions on semiconductor exports to China, the most recent in October severely impacting shipments of AI chips. With global demand for advanced chips on the rise, major economies like the U.S. and South Korea have implemented support packages to bolster their chip industries.
Chinese chip manufacturers have been investing heavily in domestic supply chains and advancing chip technologies. It’s estimated that Chinese companies procured over $30 billion worth of chip-making equipment last year, catering to about a third of the global total.
This fund aims to bridge the technological gap, enhance the development of advanced chips, and strengthen the production of mature-node chips. While China currently lags in the global foundry business share, this funding could pave the way for catching up in advanced chip-making capabilities.
The initiative is expected to act as an asset management firm, investing in both public and private chip companies. By supporting higher valuations and attracting state-owned enterprises, the fund can facilitate growth in the semiconductor industry.
In reaction to the news, Chinese semiconductor shares surged, with companies like SMIC and Hua Hong registering significant gains. The scale of this fund underscores China’s determination to bolster its semiconductor ecosystem amid external restrictions, signaling an accelerated push towards self-sufficiency in chip manufacturing.
