China establishes a $37.5 billion fund to expand the semiconductor industry

China establishes a $37.5 billion fund to expand the semiconductor industry
China establishes a $37.5 billion fund to expand the semiconductor industry

China has launched its third planned state-backed investment fund to help its semiconductor industry, with a registered capital of 344 billion yuan ($47.5 billion).

With a registered capital of 344 billion yuan ($47.5 billion), China has established its third planned state-backed investment fund to support semiconductor industry, as per a filing with a government-run enterprises registry.

President Xi Jinping’s ambition for China to become self-sufficient in semiconductors is placed into perspective by the hundreds of billions of yuan invested in the industry.

Since the United States has implemented a number of export restriction measures in the last few years due to concerns that Beijing may utilize these cutting-edge semiconductors to enhance its military capabilities, this pledge has become even more urgent.

The CES CN Semiconductor Index (CSI990001), which opens a new tab, surged more than 3% and is expected to record its largest one-day rise in over a month as Chinese chip equities increased.

Per the government-run credit information agency National Enterprise Credit Information Publicity System, the third phase of the China Integrated Circuit Industry Investment Fund was formally established on May 24 and registered under the Beijing Municipal Administration for Market Regulation.

Known as the “Big Fund,” the China Integrated Circuit Industry Investment Fund is launching three funds, the largest of which will be the third phase.

As per Tianyancha, a Chinese enterprise information database company, the largest stakeholder is the Ministry of Finance of China, holding 17% ownership and having paid-in capital of 60 billion yuan. With a 10.5% stake, China Development Bank Capital is the second-largest stakeholder.

A total of seventeen other corporations have been identified as investors, comprising five prominent Chinese banks: China Construction Bank, Agricultural Bank of China, Bank of China, Bank of Communications, and Industrial and Commercial Bank of China. These banks have contributed around 6% of the total capital.

In September, it was announced that China would begin the Big Fund’s third phase.

The fund’s first phase was launched in 2014 with 138.7 billion yuan in registered capital, and its second phase with 204 billion yuan in registered capital followed in 2019.

The Big Fund has financed several smaller businesses and funds in addition to Yangtze Memory Technologies, a manufacturer of flash memory, and the two largest chip foundries in China, Semiconductor Manufacturing International (0981.HK), which opens a new tab, and Hua Hong Semiconductor (688347.SS), which opens a new tab.

According to a September article by Reuters, one of the main areas that the fund’s third phase will concentrate on is chip production equipment. In addition, the Big Fund is thinking of employing two or more organizations to manage the money in the third phase.

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