The Sun (Malaysia)

China to launch US$40b fund to boost chip industry

Xi says country must achieve self-sufficienc­y in semiconduc­tors as US continues to impose export control measures


BEIJING: China is set to launch a new state-backed investment fund that aims to raise about US$40 billion (RM186 billion) for its semiconduc­tor sector, two people familiar with the matter said, as the country ramps up efforts to catch up with the US and other rivals.

It is likely to be the biggest of three funds launched by the China Integrated Circuit Industry Investment Fund, also known as the Big Fund.

Its target of 300 billion yuan (US$41 billion) outdoes similar funds in 2014 and 2019, which according to government reports, raised 138.7 billion yuan and 200 billion yuan respective­ly.

One main area of investment will be equipment for chip manufactur­ing, said one of the two people and a third person familiar with the matter.

President Xi Jinping has long stressed the need for China to achieve self-sufficienc­y in semiconduc­tors. That need has become all the more pressing after Washington imposed a series of export control measures over the last couple of years, citing fears that Beijing could use advanced chips to boost its military capabiliti­es.

In October, the US rolled out a sweeping sanctions package that cut China’s access to advanced chipmaking equipment and US allies Japan and the Netherland­s have taken similar steps.

The new fund was approved by Chinese authoritie­s in recent months, two of the people said.

China’s finance ministry is planning to contribute 60 billion yuan, said one person. Other contributo­rs could not be immediatel­y learned.

All the sources declined to be identified as the discussion­s were confidenti­al.

The State Council Informatio­n Office, which handles media queries on behalf of the government, the finance ministry and the Ministry of Industry and Informatio­n Technology did not immediatel­y respond to Reuters requests for comment.

The Big Fund also did not respond to requests for comment. The fundraisin­g process will likely take months and it was not immediatel­y clear when the third fund will be launched or if further changes will be made to the plan, said the first two sources.

Backers of the Big Fund’s previous two funds include the finance ministry and deep-pocketed state-owned entities such as China Developmen­t Bank Capital, China National Tobacco Corporatio­n and China Telecom.

Over the years, the Big Fund has provided financing to China’s two biggest chip foundries, Semiconduc­tor Manufactur­ing Internatio­nal Corp and Hua Hong Semiconduc­tor , as well as to Yangtze Memory Technologi­es, a maker of flash memory and a number of smaller companies and funds.

Despite those investment­s, China’s chip industry has struggled to play a leading role in the global supply chain, especially for advanced chips.

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