Wave of corruption claims crash into China's chip Big Fund

On the same day the United States kickstarts one of its own

China’s semiconductor investment fund — better known as the Big Fund — has become mired in controversy over the past few weeks as the country’s corruption watchdog continues to sniff out allegations of misconduct.

This week, the Central Commission for Discipline Inspection (CCDI) has reportedly opened investigations into three more current and former executives at Sino IC Capital, which manages the Big Fund's resources, citing “serious violations of discipline and law.”

The CCDI has leveled these accusations against Du Yang, a former director at Sino IC capital, and Yang Zhengfan, deputy manager at the firm. Meanwhile, Reuters reports a third Sino employee, Liu Yang, was under investigation by Beijing authorities for “committing law violations.”

Sino IC Capital is responsible for managing the China Integrated Circuit Industry Investment Fund — or Big Fund. Established in 2014, the fund provides financing to bring Chinese semiconductor design and manufacturing capabilities inline with the likes of the US, South Korea, and Taiwan. To date the Big Fund has raised tens of billions of dollars to support home-soil chipmakers including 7nm newcomers SMIC and NAND-fabber YMTC.

The investigations mark the latest crackdown on Big Fund executives. Last month CCDI opened an investigation into the fund’s previous head, Lu Jun, citing similar charges. However, the CCDI’s investigation doesn’t appear to be limited to former fund managers. Last week, the watchdog opened an investigation into Ding Wenwu, the Big Fund’s current leader.

Allegations of corruption and misconduct aren’t limited to China’s financial district either. Last month The CCDI and China’s State Supervision Commission opened an investigation into Xiao Yaqing, the nation’s minister for industry and information technology.

Xiao is also suspected of “violating discipline and law” and has been placed under “review and investigation,” leading to speculation that the high-ranking government official had fallen out of favor with President Xi Jinping.

History has shown the Chinese president has little public appetite for grift and has been aggressive in his efforts to squash it. As The Register has previously reported, while it's possible Xiao could have done something to warrant such an investigation, it’s also possible he many have fallen out of Xi’s favor.

The investigations come as China faces intense pressure from the West over its domestic semiconductor industry. The US is said to be weighing measures that would deny chipmakers with manufacturing facilities in China from obtaining equipment necessary to produce leading edge NAND flash modules.

Meanwhile US President Joe Biden has signed into law the $280 billion CHIPs and Science bill which seeks to widen the lead US’s intellectual and manufacturing lead over China. The bipartisan bill is in essence US answer to China’s Big Fund. ®

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