China is Set to Invest $40 Billion in Chinese Chip Industry

China wants to create a big investment fund, around $40 billion, to help its semiconductor industry. They’re doing this to catch up with the United States and other countries in terms of semiconductor technology.

This new fund will likely be the largest among three funds managed by the China Integrated Circuit Industry Investment Fund, also known as the Big Fund. They aim to raise 300 billion yuan, which is more than what they raised in 2014 and 2019.

Why China is Investing Largely in Chip Industry China Chip Industry

A big part of this investment will go into getting equipment for making computer chips. President Xi Jinping has been saying that China needs to make its own chips for self-sufficiency, especially because the U.S. and other countries have put restrictions on exporting chips to China.

The U.S. stopped China from getting advanced chip equipment in October. Other countries like Japan and the Netherlands did the same. The Chinese government approved this new fund recently, according to two people who are closer to this matter.

People who know about this are anonymously disclosing information due to confidentiality. The government and some other organizations did not respond to inquiries.

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Major Chinese Companies Backing Most of these FundingChina Chip Industry

This fundraising will take several months, and we’re not sure when the new fund will officially start or if they will change the plan. In the past, the Big Fund got money from the government and big state-owned companies like China Development Bank Capital, China National Tobacco Corporation, and China Telecom. They used this money to support chip factories and other tech companies.

The Big Fund has played a significant role in providing financing to key players in China’s semiconductor industry. This includes support for Semiconductor Manufacturing International Corporation (SMIC), one of the largest chip foundries in China, as well as Hua Hong Semiconductor, another major player in the semiconductor manufacturing sector. The fund has also extended financial support to Yangtze Memory Technologies, a company specializing in flash memory technology.

In addition to these major investments, the Big Fund has also provided funding to various smaller companies and funds within the semiconductor ecosystem. These investments are part of China’s broader efforts to develop and strengthen its domestic semiconductor industry, which is crucial for achieving self-reliance in technology and reducing reliance on foreign semiconductor suppliers.


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