With a registered capital of 344 billion yuan ($47.5 billion), China has established its third planned state-backed investment fund to support its semiconductor sector, as per a registration 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 spent 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 utilise these cutting-edge semiconductors to enhance its military capabilities, this pledge has become even more urgent.

The CES CN Semiconductor Index surged over 3%, registering the largest one-day rise in over a month, as Chinese chip equities increased.

According to 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 enterprises information database firm, the largest stakeholder is the Ministry of Finance of China, holding a 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 entities have been listed 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 approximately 6% of the total capital.

September saw rumours that China might start 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 registered capital followed in 2019.

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

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

(Adapted from Business-Standard.com)