Abhitesh
Two people with knowledge of the situation say that China is about to start a new state-backed investment fund that will try to raise about $40 billion for its chip industry. This is part of the country’s efforts to catch up with the U.S. and other rivals.
It is expected to be the biggest of the three funds started by the China Integrated Circuit Industry Investment Fund, also called the Big Fund.
Its goal of 300 billion yuan ($41 billion) is more than what similar funds raised in 2014 and 2019, which were 138.7 billion yuan and 200 billion yuan, respectively, according to government sources.
One of the two people and the third person said that equipment for making chips will be a big area of spending.
President Xi Jinping has talked for a long time about how important it is for China to make its own electronics. This need is even more urgent now that Washington has put in place a series of export control measures over the last couple of years, citing fears that Beijing could use advanced chips to improve its military capabilities.
In October, the U.S. put out a broad set of penalties that cut off China’s access to high-tech equipment for making chips. Japan and the Netherlands, both U.S. allies, have taken similar steps.
Two of the people said that the new fund was accepted by the Chinese government in the past few months.
One person said that China’s finance office plans to give 60 billion yuan. Other people who helped could not be found right away.
All of the people refused to give their names because the talks were private.
The State Council Information Office, which answers questions from the media on behalf of the government, the Ministry of Finance, and the Ministry of Industry and Information Technology did not quickly respond to Reuters’ requests for comment.
The Big Fund also didn’t answer right away when asked for a statement.
INVESTMENTS TO DATE
The process of raising money is likely to take months, and the first two sources didn’t know right away when the third fund would start or if the plan would be changed again.
The finance minister and state-owned companies with a lot of money, like China Development Bank Capital, China National Tobacco Corporation, and China Telecom, helped back the Big Fund’s first two funds.
Over the years, the Big Fund has given money to China’s two biggest chip foundries, Semiconductor Manufacturing International Corporation and Hua Hong Semiconductor, as well as to Yangtze Memory Technologies, which makes flash memory, and a number of smaller companies and funds.
Even with all of these investments, China’s chip industry has had trouble becoming a leader in the global supply chain, especially when it comes to advanced chips.
INVESTMENT MANAGERS
Three people said that the Big Fund might hire at least two institutions to invest the new fund’s cash.
Since 2021, China’s anti-corruption authority has been looking into several current and past top officials at SINO-IC Capital, the only manager for the first two funds of the Big Fund.
Still, two of the people said that SINO-IC Capital is likely to be one of the managers for the third fund.
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SINO-IC Capital did not reply right away when asked for a comment.
Two of the people said that Chinese officials have also talked to the financial arm of the state-owned China Aerospace Science and Technology Corporation, which is called China Aerospace financial, about being one of the managers.
When asked for a comment, China Aerospace Investment did not answer right away.
