China creates $47B chiptech investment fund

Third 'Big Fund' is close to the level of US and EU subsidy programs

China has allocated a big pool of money, hoping to spur domestic semiconductor development.

The fund is actually the third version of the "National Integrated Circuit Industry Investment Fund" – colloquially known as the "Big Fund."

This one is certainly big: it's gathered 344 billion yuan of capital, or around $47 billion. The China Development Bank is the major shareholder, with a stake of around 17.4 percent. Other government agencies and Chinese banks have also invested, as has the Ministry of Finance.

News of the fund's creation emerged in a regulatory filing with China's National Enterprise Credit Information Publicity System.

Chinese media report that the third iteration of the fund will manage venture capital – a new activity for the entity – and will take a more hands-on role providing management assistance to investee companies.

That may be a nod to the spotty track record of China's efforts to create a local semiconductor industry. While the likes of Yangtze Memory and China Semiconductor Manufacturing International Corp have produced world-class silicon, other initiatives have cratered.

Wuhan Hongxin Semiconductor, for example, failed to make a single chip – or even complete its factories – despite government backing.

Just what the fund will invest in has not been revealed, but China clearly needs lots of semiconductors – given the United States has led international sanctions that prevent the middle kingdom from buying high-end processors and accelerators.

China's latest subsidy plan faces stiff competition from the US and EU, which have created semiconductor stimulus packages worth $50 billion and €43 billion ($46.5 billion) respectively. Those packages have attracted established chipmakers like Intel, TSMC and Samsung, which have the know-how to build and operate chipmaking plants – and relationships with key suppliers of lithography machines like Dutch outfit ASML.

China is not allowed to buy from ASML, and its indigenous semiconductor manufacturers can't currently match the likes of TSMC and Intel.

But China has sometimes surprised the world by producing chips thought impossible for local factories under the heel of sanctions – notably the 7nm Kirin 9000S, that made a surprise appearance when Huawei returned to the premium smartphone market in August 2023 with the launch of the Mate 60 Pro.

Huawei's follow-up, the Pura 70 Pro, did not include a notably better SoC or any evidence that Chinese chipmakers had made further advances.

One likely focus for the new fund is RISC-V, as the permissively licensed instruction set architecture is immune to sanctions. China is understandably very keen on RISC-V as a means to develop its own silicon without outside interference. ®

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