China has announced a 300-billion-yuan ($41 billion) state-backed investment fundraiser that would allow the country to develop its semiconductor industry and allow itself to be self-sufficient in the face of a chip conflict between Beijing and Washington.
In an exclusive report, several people familiar with the matter told Reuters on the condition of anonymity that the target figure set by the China Integrated Circuit Industry Investment Fund, also known as the Big Fund, was larger than the ones raised in 2014 and 2019.
Two of the sources added the new fund was approved by Chinese authorities in recent months, with the Chinese finance ministry planning to chip in CNY 60 billion ($8.2 billion).
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Chipping In for China's Chip Industry
One of the sources said a main area of investment would be equipment for chip manufacturing, in line with President Xi Jinping's goal of making China self-sufficient in terms of semiconductor production. The need for such became more pressing as the US imposed a series of export control measures over the past few years, claiming fears that China could use advanced semiconductors to develop its military capabilities.
Some of the most notable sanctions against Chinese access to advanced chip-making equipment was the one announced by Washington in October, with Japan and the Netherlands following suit.
But Washington's sanctions were recently met with extreme concern by the tech giant Nvidia,
The fundraising process would likely take months and it was not immediately clear when the fund would be launched or if further changes would be made to the plan, two of the sources said.
Other contributors to the fund have not yet been identified. However, the investors in the two previous fundraisers were identified as the finance ministry and deep-pocketed state-owned entities such as China Development Bank Capital, China National Tobacco Corporation, and China Telecom.
Through the years, the Big Fund has provided financing to China's two biggest chip foundries, Semiconductor Manufacturing International Corporation and Hua Hong Semiconductor, as well as to Yangtze Memory Technologies, a maker of flash memory drives, and a number of smaller companies and funds.
Yet even with state backing, China's chip industry has struggled to play a leading role in the global supply chain, especially for advanced chips.
Calling for Investors
The sources also stated that the Big Fund was considering encouraging at least two institutions to invest in the fund's new capital after several senior officials and former officials at SINO-IC Capital, the sole manager for the Big Fund's first two funds, have been under investigation by China's anti-graft authority since 2021.
Nevertheless, SINO-IC Capital is expected to remain one of the managers for the third fund, two of the sources said.
Chinese officials have also reached out to China Aerospace Investment, the investment arm of state-owned China Aerospace Science and Technology Corporation, to discuss being one of the managers, two of the sources added.
China's State Council Information Office, Finance Ministry, Ministry of Industry and Information Technology, the Big Fund, SINO-IC Capital, and China Aerospace Investment have all been requested by Reuters for comments about the latest fundraiser but did not immediately respond.
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