China's USD 47.5 Billion Fund to Break Semiconductor Dependence

China has launched USD 47.5 billion fund to boost its semiconductor industry and establish a local supply chain. It is the largest of the three funds launched by the China Integrated Circuit Industry Investment Fund, known as the "Big Fund”. The first fund was set up in 2014 with 138.7 billion Yuan (USD 19.2 billion). The second fund was established five years later, with a registered capital of 204.1 billion Yuan (28.2 billion).

The Ministry of Finance in China is the largest shareholder and holds 17.44% of the fund, followed by 10.47% owned by China Development Bank Capital Co. Ltd. and 8.72% of Shanghai Guosheng Group Co. Ltd. Five major Chinese banks: Industrial and Commercial Bank of China, China Construction Bank, Agricultural Bank of China, Bank of China, and Bank of Communications, each holds around 6% of the total fund.

This initiative came amidst US restrictions on exporting advanced semiconductors and chip manufacturing equipment to China, which have impacted shipments of AI chips. Additionally, the US government has also pressed its allies, including the Netherlands and Japan, to enact similar restrictions.

The ultimate objective of the fund is to reduce foreign reliance on the domestic chip industry and to achieve the objective under the Made in China 2025 initiative. This includes becoming a global leader in a wide range of industries, including artificial intelligence (AI), 5G wireless, and quantum computing.

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