China is taking significant steps to bolster its semiconductor industry with the launch of a colossal $41 billion fund.
This initiative, announced by the China Integrated Circuit Industry Investment Fund, commonly known as the “Big Fund,” marks the largest of three funds introduced by the country.
It comes as the United States tightens restrictions on chip exports to China, adding to the ongoing global competition for dominance in the semiconductor sector.
The primary focus of this substantial fund will be directed toward investments in chip manufacturing equipment, according to reports.
The fund’s mission is to amass $41 billion in financial resources, a considerable effort given its scale. In comparison, the previous funds initiated by the Big Fund in 2014 and 2019 raised approximately $19 billion and $27 billion, respectively.
Semiconductors are essential materials such as silicon used in electronic circuits and play a pivotal role in a wide array of technological applications.
Their importance has surged notably with the emergence of artificial intelligence (AI) and the intensifying global race to establish supremacy in the semiconductor industry.
The United States had already begun imposing restrictions on semiconductor exports to China, a move that garnered attention even before the AI boom.
In October 2022, the US Department of Commerce implemented updates to export controls, significantly limiting China’s ability to advance its semiconductor and supercomputing technologies.
Taiwan Semiconductor Manufacturing Company (TSMC), the world’s most valuable semiconductor firm, is situated in Taiwan but is currently constructing a $40 billion factory in Phoenix, Arizona.
This strategic move is driven by concerns of potential interference from China, with some officials in the past even suggesting that the United States would rather dismantle Taiwan’s semiconductor facilities than permit Chinese control.
Chinese President Xi Jinping has repeatedly emphasized the need for greater self-sufficiency in the semiconductor sector. In March, Xi underscored the importance of scientific and technological innovation in the face of fierce international competition.
The establishment of this extensive state-backed fund serves as a formidable response to these challenges, furthering China’s pursuit of self-reliance in the semiconductor industry despite prevailing sanctions.