China has initiated the formation of its third state-backed investment fund aimed at bolstering its semiconductor sector, with a registered capital totaling 344 billion yuan ($47.5 billion), as per filings in a government-run companies registry.
This substantial investment underscores President Xi Jinping’s concerted effort to attain self-reliance for China in semiconductor technology. The sense of urgency behind this commitment has been amplified following a series of export control measures imposed by the United States over the past few years. The U.S. cited concerns that Beijing could exploit advanced chips to enhance its military capabilities.
In response to this initiative, Chinese chip shares experienced an upsurge, with the CES CN Semiconductor Index (.CSI990001) rallying more than 3%, marking its most significant one-day gain in over a month.
According to records from the National Enterprise Credit Information Publicity System, a government-run credit information agency, the third phase of the China Integrated Circuit Industry Investment Fund was officially established on May 24. It was registered under the Beijing Municipal Administration for Market Regulation.
This third phase stands as the largest among the three funds launched by the China Integrated Circuit Industry Investment Fund, commonly referred to as the “Big Fund.” The Ministry of Finance of China holds the largest stake, amounting to 17% with a paid-in capital of 60 billion yuan, according to Tianyancha, a Chinese company information database. China Development Bank Capital follows as the second-largest shareholder, holding a 10.5% stake.
The Ministry of Finance did not immediately respond to Reuters’ request for comment. Seventeen other entities are listed as investors, including five major Chinese banks: Industrial and Commercial Bank of China, China Construction Bank, Agricultural Bank of China, Bank of China, and Bank of Communications, each contributing approximately 6% of the total capital.
In September, Reuters reported China’s intention to launch the third phase of the Big Fund. The first phase, established in 2014, boasted a registered capital of 138.7 billion yuan, while the second phase, launched in 2019, had 204 billion yuan in capital.
The Big Fund has provided financing to some of China’s largest chip foundries, such as Semiconductor Manufacturing International Corporation and Hua Hong Semiconductor, as well as to Yangtze Memory Technologies, a flash memory manufacturer, and several smaller companies and funds.
Reportedly, a significant area of focus for the third phase of the fund will be equipment for chip manufacturing. Additionally, the Big Fund is contemplating the engagement of at least two institutions to manage investments from the third phase.
(Note: Conversion rate used: $1 = 7.2449 yuan)
