🧠 Food for thought

Implications, context, and why it matters.

Shanghai’s chip fund expansion sits within a multi-layered funding plan

• The Shanghai IC Fund is backed by local government. Separately, Shanghai runs three leading industry funds of funds (FoFs) that pool capital and allocate it to specialized sub-funds focused on integrated circuits, biomedicine, and artificial intelligence 1.
• The FoFs’ third batch of selected sub-funds includes four integrated circuit sub-funds. They plan 1.4 billion yuan in spending across memory storage and AI chips, core components and materials, high-end equipment, and advanced packaging 1.
• This local approach runs in parallel with the national China Integrated Circuit Industry Investment Fund’s third phase, often called “Big Fund III.” It was set up in May 2024 with registered capital of 344 billion yuan (US$47.5 billion) 2.

China is moving from chip buying toward building more of the production base

• These investments tie to export restrictions that have limited Chinese chipmakers’ access to advanced wafer fabrication tools from firms such as ASML and Applied Materials. The pressure has pushed more work toward domestic capacity 3.
• Local funds such as the Shanghai IC Fund have put money into a range of local chip companies, rather than only wafer foundries such as Semiconductor Manufacturing International Corp (SMIC). National and local efforts also increasingly target equipment and materials across the semiconductor supply chain 4.
• This state-led push can expand demand for Chinese chipmaking tool makers such as Advanced Micro-Fabrication Equipment (AMEC) and NAURA Technology Group. It may also deepen a split global technology supply chain 3.