China’s Ambitious $40 Billion Semiconductor Investment Fund Signals Tech Advancement Push

China is preparing to launch a substantial state-back investment fund, aiming to secure approximately $40 billion in funding for its semiconductor sector. This strategic move comes as China intensifies its efforts to narrow the technological gap with global competitors.

This new fund is expected to surpass its predecessors, as it is set to be the largest among the free funds established by the China Integrated Circuit Industry Fund, often referred to as the “Big Fund.” The fund’s ambitious target of 300 billion (equivalent to $41 billion) exceeds the amounts raised by similar funds in 2014 and 2019, which, according to government reports, collected 138.7 billion yuan and 200 billion yuan, respectively.

One of the primary focus areas for this investment initiative will be acquiring equipment essential for focus areas manufacturing, as disclosed by sources familiar with the matter.

The new investment fund received approval from Chinese authorities in recent months, according to two insiders. The Ministry of Finance in China plans to contribute 60 billion yuan, with other contributors yet to be disclosed.

In a related development, Chinese auto chipmaker GTA Semiconductor recently concluded a substantial financing round, primarily funded by the state, totaling over $1.8 billion. This move is a clear signal of Beijing’s ongoing commitment to investing in the domestic chip manufacturing industry.           

With this significant capital injection, GTA Semiconductor, based in Shanghai and one of China’s leading auto chip manufacturers, has raised over $2.7 billion in less than two years, primarily from state sources.

This substantial funding is considered one of the largest domestic funding rounds in China this year. It underscores China’s determination to bolster domestic chip production and reduce reliance on foreign technology. While many cars still use non-advanced chips, the rate of replacement by domestically produced chips in China remains below 10%, making it a key area for future investment, as reported by the state-backed Securities Times.

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