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China Establishes US$47.5 Billion Fund to Boost Semiconductor Sector

China sets up its third state-backed investment fund with a registered capital of US$47.5 billion to boost the semiconductor sector. The fund aims to achieve self-sufficiency in semiconductors and counter the US export control measures. Chinese chip shares experience a surge following the announcement.

The filing was made with a government-run companies registry, highlighting China's commitment to achieving self-sufficiency in semiconductors.


President Xi Jinping's drive for self-sufficiency has gained renewed urgency due to the United States' imposition of export control measures in recent years. The US has expressed concerns that Beijing could leverage advanced chips to enhance its military capabilities.


Following the announcement, Chinese chip shares experienced a surge, with the CES CN Semiconductor Index rallying over 3%. This marks the largest one-day gain in more than a month.


The newly established fund, known as the third phase of the China Integrated Circuit Industry Investment Fund or the "Big Fund," was officially launched on May 24. It is registered under the Beijing Municipal Administration for Market Regulation, as confirmed by the National Enterprise Credit Information Publicity System, a government-run credit information agency.


China's finance ministry holds the largest stake in the fund, with 17% ownership and a paid-in capital of 60 billion yuan. The second-largest shareholder is China Development Bank Capital, with a 10.5% stake. Reuters reached out to the Ministry of Finance for comment, but no immediate response was received.


Seventeen other entities are listed as investors, including major Chinese banks such as Industrial and Commercial Bank of China, China Construction Bank, Agricultural Bank of China, Bank of China, and Bank of Communications. Each of these banks has contributed approximately 6% of the total capital.


This latest fund marks the third phase of the Big Fund, following the establishment of the first phase in 2014 with a registered capital of 138.7 billion yuan, and the second phase in 2019 with 204 billion yuan.


The Big Fund has already provided financing to key players in China's semiconductor industry, including Semiconductor Manufacturing International Corporation, Hua Hong Semiconductor, Yangtze Memory Technologies, and several smaller companies and funds.


The third phase of the fund will primarily focus on investing in chip manufacturing equipment, as reported by Reuters in September. Additionally, the Big Fund is considering hiring at least two institutions to manage the capital from this phase.

 
  • China sets up its third state-backed investment fund with a registered capital of US$47.5 billion to boost the semiconductor sector.

  • The fund aims to achieve self-sufficiency in semiconductors and counter the US export control measures.

  • Chinese chip shares experience a surge following the announcement.


Source: REUTERS

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