China has established its largest-ever semiconductor investment fund, amassing $47.5 billion, to advance its domestic chip industry. This initiative is part of Beijing's ongoing efforts to achieve self-sufficiency in the face of increasing US restrictions aimed at curbing China's technological growth.
The third phase of the National Integrated Circuit Industry Investment Fund, known as Big Fund III, was incorporated on May 24. It has gathered 344 billion yuan from the central government and state-owned entities, including the Industrial & Commercial Bank of China Ltd., according to Tianyancha, an online company registration information platform.
This new fund underscores the renewed push by Xi Jinping's government to develop its own semiconductor industry amid escalating tensions with the US. The Biden administration has implemented extensive restrictions on China's access to advanced chips and chipmaking equipment and is now encouraging allies like the Netherlands, Germany, South Korea, and Japan to tighten export controls on China.
Following the announcement, shares of major Chinese chip companies surged on Monday. Semiconductor Manufacturing International Corp., China's largest chipmaker, saw an increase of up to 8.1% in Hong Kong, while Hua Hong Semiconductor Ltd., a smaller competitor, climbed over 10%.
The largest shareholder in Big Fund III is China’s Ministry of Finance, with contributions also coming from investment firms owned by local governments in Shenzhen and Beijing. The Shenzhen government has been supporting several chipmaking plants in Guangdong province to help Huawei Technologies Co. mitigate the impact of US sanctions that have restricted its access to many imported semiconductor components.