China Integrated Circuit Industry Investment Fund: State-Led Chip Investment

The China Integrated Circuit Industry Investment Fund is a state-led investment initiative aimed at boosting China's chip industry. It was established in 2014 with a total investment of 140 billion yuan.

The fund's primary goal is to support the development of domestic chip companies, enabling them to compete with international giants. This is a crucial step for China to reduce its reliance on foreign technology.

The fund has already shown promising results, with several domestic chip companies receiving significant investments and achieving rapid growth.

The current situation in China's integrated circuit industry is quite complex. China Integrated Circuit Industry Investment Fund was established in 2014 to promote the development of the domestic integrated circuit industry.

The fund has a total investment of 140 billion yuan, which is a significant amount that can be used to support various projects.

China's integrated circuit industry has been facing challenges such as high production costs and limited domestic demand.

The fund's investment in the industry has helped to increase the number of domestic integrated circuit companies, from 10 in 2014 to over 100 in 2018.

China's semiconductor industry is getting a significant boost from the third phase of the national integrated circuit industry investment fund, with a registered capital of 344 billion yuan ($47.5 billion).

The fund has already shown its impact, with shares of Hua Hong Semiconductor closing 11.47% higher on Monday, while SMIC jumped 7.43%, and other companies also experiencing significant gains.

The establishment of this fund aligns with President Xi Jinping's emphasis on achieving semiconductor self-sufficiency, particularly in light of the US's recent imposition of export control measures.

China's chip fabrication process is expected to remain several generations behind the global cutting edge, but the country's chip-related investments will position it to increase mature-node production capacity.

The US-led export controls will limit the extent of China's advantages, but their enforcement will remain imperfect, as evidenced by China's IC advances in September 2023.

China will also seek to blunt US-led trade restrictions by investing in emerging semiconductor technologies with less certain prospects, such as compound semiconductors and silicon photonics.

The fund's significant shareholders include China's finance ministry and China Development Bank Capital, and major Chinese banks such as Industrial and Commercial Bank of China, China Construction Bank, and Agricultural Bank of China are also contributing to the fund.

The future of China's integrated circuit industry is looking bright, with the China Integrated Circuit Industry Investment Fund playing a key role in driving growth. The fund has already invested in over 200 domestic IC companies, supporting their development and expansion.

The fund's focus on supporting domestic IC companies is crucial for China's goal of becoming a self-sufficient leader in the industry. By doing so, China aims to reduce its reliance on foreign imports and create a more balanced IC supply chain.

China's IC industry is expected to reach $1 trillion in value by 2030, with the fund's investments helping to drive this growth. The fund's strategic investments in key areas such as memory chips, logic ICs, and IC design services will play a crucial role in achieving this goal.

As the fund continues to invest in the industry, we can expect to see more domestic IC companies emerging as leaders in their respective fields. This will not only drive innovation but also create new job opportunities and stimulate economic growth.

The Big Fund is considering hiring at least two institutions to invest its new capital. This move suggests a desire for diversification and risk management.

SINO-IC Capital, the sole manager for the Big Fund's first two funds, is expected to remain one of the managers for the third fund. Several senior officials and former officials at SINO-IC Capital have been under investigation by China's anti-graft authority since 2021.

Chinese officials have reached out to China Aerospace Investment, the investment arm of state-owned China Aerospace Science and Technology Corporation, to discuss being one of the managers. China Aerospace Investment did not immediately respond to a request for comment.

The Big Fund has a history of providing financing to key players in China's chip industry, including Semiconductor Manufacturing International Corporation and Hua Hong Semiconductor, China's two biggest chip foundries.

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 also invested in Yangtze Memory Technologies, a maker of flash memory, as well as a number of smaller companies and funds.

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

The Big Fund is considering hiring at least two institutions to invest the new fund's capital.

Several senior officials and former officials at SINO-IC Capital, the sole manager for the Big Fund's first two funds, have been under investigation by China's anti-graft authority since 2021.

SINO-IC Capital is expected to remain one of the managers for the third fund.

Chinese officials have reached out to China Aerospace Investment, the investment arm of state-owned China Aerospace Science and Technology Corporation, to discuss being one of the managers.

China Aerospace Investment did not immediately respond to a request for comment.