China unveils $47.5b fund to power semiconductor industry

Photo credit: Shutterstock / Gui Jun Peng

China has launched a fund with 344 billion yuan (US$47.5 billion) in registered capital to boost its semiconductor sector amid rising US export restrictions, Reuters reported.

The new state-sponsored fund outpaces two earlier ones in terms of size. The first, which was set up in 2014, was worth US$19.1 billion, while the 2019 fund had a US$28.2 billion investment. These are collectively known as the “Big Fund” and were launched by the China Integrated Circuit Industry Investment Fund, according to Reuters.

China’s Ministry of Finance is the leading shareholder of the third fund, owning 17% and US$8.3 billion in total. China Development Bank Capital is the second-largest shareholder with a 10.5% stake. Five other Chinese banks have also invested, each holding about 6% of total capital.

The two other funds have previously financed prominent chip foundries in China like Semiconductor Manufacturing International Corporation and Hua Hong Semiconductor, alongside Yangtze Memory Technologies and several smaller firms and funds.

Chip manufacturing equipment will be the main focus of the third fund, Reuters noted. The Big Fund also plans to hire at least two firms to handle the new investment vehicle.

China is currently the world’s largest consumer of semiconductors, accounting for over 50% of global consumption. The country is also the world’s fifth-largest semiconductor manufacturer, trailing behind Taiwan, South Korea, Japan, and the US.

See also: Can chiplets power China’s genAI ambition?

Currency converted from Chinese yuan to US dollars: US$1 = 7.2 yuan