China is ramping up its efforts to assert dominance in advanced technologies with a significant investment in its semiconductor industry. The Chinese government is establishing its largest-ever semiconductor state investment fund, worth a staggering $47.5 billion, as part of its strategy to bolster its position in the global tech landscape.
Backed by investments from six of the country’s largest state-owned banks, including ICBC and China Construction Bank, the fund reflects President Xi Jinping’s ambitious agenda to elevate China to a tech superpower status. This move comes in response to US restrictions on the export of American chips and chip technology, aimed at curbing Beijing’s technological ambitions.
Aligned with China’s Made in China 2025 initiative, which aims to position the country as a leader in industries like artificial intelligence, 5G wireless, and quantum computing, the new investment vehicle represents the third phase of the China Integrated Circuit Industry Investment Fund. Known as the “Big Fund,” it was officially established in Beijing, signaling a significant milestone in China’s semiconductor industry development.
The announcement has sparked a surge in the shares of top Chinese chipmakers, with Semiconductor Manufacturing International Corporation (SMIC) and Hua Hong Semiconductor experiencing notable gains. SMIC, the world’s third-largest contract chipmaker, has seen a 7% increase in its stock since the news broke, while Hua Hong Semiconductor, a key supplier for Huawei, has gained 13%.
The fund’s primary focus will be on advancing chip manufacturing, design, equipment, and materials, with the goal of bringing China’s semiconductor industry up to international standards by 2030. This investment initiative is not only a response to Western sanctions but also underscores Xi’s longstanding vision to position China as a global technology leader.
Amid escalating tensions between the US and China, characterized by export controls and trade restrictions, the establishment of the new chip fund represents a strategic move by Beijing to secure its technological future. By investing in domestic semiconductor capabilities, China aims to reduce its dependence on foreign technology and assert greater autonomy in the global tech arena.
Despite external challenges and restrictions, China has demonstrated resilience and innovation in its semiconductor sector, as evidenced by Huawei’s recent introduction of a smartphone powered by a domestically produced 7-nanometer processor. This milestone achievement reflects China’s determination to overcome technological barriers and assert its position as a formidable player in the global semiconductor industry.