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To boost domestic semiconductor sector, China sets up third fund with USD 47.5 billion

IFM_China Semiconductor
China must become self-sufficient in semiconductors, according to President Xi Jinping

According to a filing with a government-run companies registry, China has established its third planned state-backed investment fund with a registered capital of 344 billion yuan (USD 47.5 billion) with the aim of advancing its semiconductor industry.

China must become self-sufficient in semiconductors, according to President Xi Jinping. This necessity has grown since the United States has implemented a number of export control measures in recent years, citing concerns that Beijing might use cutting-edge chips to strengthen its military might.

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

Of the three funds that the China Integrated Circuit Industry Investment Fund, also referred to as the “Big Fund,” has launched, the third phase will be the largest.

Tianyancha, a Chinese company information database company, reports that the largest shareholder is the Chinese Ministry of Finance, with a 17% stake and paid-in capital of 60 billion yuan. The second-largest shareholder, holding a 10.5% stake, is China Development Bank Capital.

Five significant Chinese banks, the Industrial and Commercial Bank of China, China Construction Bank, Agricultural Bank of China, Bank of China, and Bank of Communications, are among the seventeen other entities listed as investors; together, they have contributed approximately 6% of the total capital.

China will begin the Big Fund’s third phase, according to a September 2023 report from Reuters.

The fund was founded in two phases. The first phase began in 2014 with 138.7 billion yuan in registered capital, and the second phase followed in 2019 with 204 billion yuan.

In addition to Yangtze Memory Technologies, a manufacturer of flash memory, and several other smaller businesses and funds, the Big Fund has financed Semiconductor Manufacturing International Corporation and Hua Hong Semiconductor, the two largest chip foundries in China.

Chip manufacturing equipment is one of the main areas that the fund’s third phase will reportedly concentrate on. In order to invest the money from the third phase, the Big Fund is also thinking about hiring at least two institutions.

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