China unveiled its third, unprecedented $47.5 billion chip fund, designed to elevate its semiconductor industry. Moreover, this initiative stands as their most substantial chip fund to date, with contributions from the central government, state-owned banks, and enterprises.
Also, the hefty investment coincides with harsh U.S. sanctions targeting Huawei Technologies, escalating tensions between the two global powerhouses. China has been ramping up efforts for self-sufficiency across different sectors, advocating for domestic chip adoption among electric vehicle manufacturers, and intensively importing chip manufacturing tools. This rivalry between China and the U.S. is now branching out into other areas. China is divesting billions from U.S. treasuries in favor of boosting gold reserves at an unprecedented rate. Consequently, this action may potentially undermine the stability of the U.S. dollar.
The finance ministry leads as the largest stakeholder, with 17% ownership and 60 billion yuan in paid-in capital. Not too far behind is China Development Bank Capital, securing a 10.5% holding. In addition, several other entities are recognized as investors, including five major Chinese banks, each footing about 6% of the total capital.
The third phase of the China Integrated Circuit Industry Investment Fund has the core objective of advancing China’s semiconductor industry to international standards by 2030. This will be achieved by investing in chip manufacturing, design, equipment, and materials. The notorious corruption scandals that the “Big Fund” has encountered in recent times have not gone unnoticed. Consequently, this prompted the Biden administration to impose broad restrictions on China’s ability to acquire advanced chips and chipmaking tools.
Notably, China’s top chip stocks witnessed a surge on Monday. Semiconductor Manufacturing International Corp., the country’s leading chipmaker, soared up to 8.1% in Hong Kong. Meanwhile, Hua Hong Semiconductor Ltd., a smaller contender, saw an impressive increase exceeding 10%.
