Shenzhen, a major technology hub in southern China, has launched a 5 billion yuan (US$692.5 million) semiconductor industry fund. The fund, named Saimi, is managed by the state-owned Shenzhen Capital Group.

The fund aims to boost the city’s semiconductor capabilities and is primarily financed by the Shenzhen municipal government guidance fund and the Longgang District’s guidance fund.

Officially registered on April 29, Saimi started with an initial 3.6 billion yuan (US$498.97 million), with the Shenzhen municipal finance bureau holding a 69.4% controlling stake.

This initiative is part of Shenzhen’s broader strategy to strengthen its semiconductor sector amid global geopolitical challenges.

By October 2024, the city had established 38 integrated circuit-related funds worth over 100 billion yuan, with plans for additional funds totaling 10 billion yuan (US$1.39 billion).

🔗 Source: South China Morning Post

🧠 Food for thought

1️⃣ China’s regional government funding strategy accelerates domestic semiconductor capacity

Shenzhen’s new fund continues China’s decade-long practice of using substantial government capital to build semiconductor self-sufficiency through a distributed funding approach.

Since 2014, when China’s State Council set ambitious targets of 40% semiconductor self-sufficiency by 2020 and 70% by 2025, the country has systematically deployed capital through both national and regional vehicles 1.

This regional funding model has accelerated in recent years, with Beijing establishing an 8.5 billion yuan ($1.2 billion) fund in August 2024, followed by Shenzhen’s latest 5 billion yuan initiative 2.

The distributed funding approach allows China to simultaneously pursue multiple technological paths, with Shenzhen alone having established 38 integrated circuit funds collectively worth over 100 billion yuan, as mentioned in the article.

This strategy creates a competitive innovation ecosystem among Chinese cities while ensuring financial support covers the entire semiconductor value chain, from design to manufacturing equipment, rather than concentrating resources in a single national program.

2️⃣ China’s semiconductor investments increasingly target self-developed equipment

Shenzhen’s funding focus reflects China’s urgent need to overcome its most critical semiconductor vulnerability, dependence on foreign manufacturing equipment, which has been directly targeted by U.S. export controls.

Despite investing $96.3 billion in subsidies and policies to boost its semiconductor sector, China still cannot produce the advanced lithography machines needed for cutting-edge chips, with its best domestic machines limited to 65-nanometer processes compared to the sub-10-nanometer capabilities of restricted ASML equipment 3.