China has launched its third state-sponsored investment fund, dubbed the 'Big Fund', with a registered capital of 344 billion yuan ($47.5 billion), as per official records. This initiative aims to support China's semiconductor industry, aiding in the country's pursuit of self-reliance in advanced chip technology, particularly in response to escalating US export restrictions targeting the sector.
The Chinese Ministry of Finance holds the most significant investment in the fund, possessing a 17% stake and contributing 60 billion yuan in paid-in capital. Following closely, China Development Bank Capital is the second-largest shareholder, holding a 10.5% stake. Additionally, five major central Chinese banks, including the Industrial and Commercial Bank of China, China Construction Bank, Agricultural Bank of China, Bank of China, and Bank of Communications, each contributed approximately 6% of the total capital.
This third phase of the China Integrated Circuit Industry Investment Fund, officially established on May 24, marks the largest of the three funds launched since 2014. The commitment of hundreds of billions of yuan highlights President Xi Jinping's drive to reduce China's dependence on foreign semiconductor technology, particularly in light of recent US export control measures citing concerns over potential military use of advanced chips.
Following the establishment of the new fund, the Big Fund has already extended financing to two prominent chip foundries in China, namely SMIC and Hua Hong Semiconductor. This development sparked a surge in Chinese chip shares, with the CES CN Semiconductor Index rising by over 3%, poised to mark its most significant one-day increase in more than a month.
The inception of this fund is a key component of China's persistent endeavors to fortify its domestic semiconductor sector and counteract the repercussions of US sanctions. Amid escalating tensions between the two nations within the tech realm, China's drive towards achieving self-reliance in advanced chip technology is projected to heighten, with the Big Fund serving as a pivotal source of financing for industry advancement.