China is gearing up to launch a massive state-backed investment fund for its semiconductor sector, aiming to raise approximately $40 billion.
This initiative is part of China’s efforts to close the technology gap with the United States and other global competitors.
The fund, managed by the China Integrated Circuit Industry Investment Fund, also known as the Big Fund, is poised to become the largest of its kind. Its target of 300 billion yuan ($41 billion) surpasses previous funds in 2014 and 2019, which raised 138.7 billion yuan and 200 billion yuan, respectively.
One of the primary focuses of this investment will be on acquiring equipment for chip manufacturing. China’s President Xi Jinping has emphasized the importance of achieving self-sufficiency in semiconductors, especially given recent export control measures imposed by Washington over concerns about military applications.
The establishment of this new fund received approval from Chinese authorities in recent months. The Chinese finance ministry is set to contribute 60 billion yuan, with other contributors yet to be disclosed, given the confidential nature of these discussions.
Despite attempts to reach out to relevant government offices and the Big Fund for comment, responses were not immediately received.
The fundraising process is expected to span several months, and specific details about the launch date and potential plan adjustments remain unclear.
Previous funds from the Big Fund have received backing from entities like the Finance Ministry, China Development Bank Capital, China National Tobacco Corporation, and China Telecom. These funds have supported major chip foundries, such as Semiconductor Manufacturing International Corporation and Hua Hong Semiconductor, as well as smaller companies and funds.
Despite these investments, China’s chip industry has struggled to gain a dominant position in the global supply chain, particularly in advanced chip production.
For the management of this new fund, the Big Fund is considering engaging at least two institutions. SINO-IC Capital, the manager for the first two funds, is expected to remain involved despite some of its officials facing investigations for alleged corruption since 2021.
Chinese officials have also reached out to China Aerospace Investment, the investment arm of the state-owned China Aerospace Science and Technology Corporation, to discuss potential involvement in managing the fund.
