China doubles down on chip independence with $47.5b fund

China has launched a massive state-backed investment fund worth $47.5 billion to bolster its domestic semiconductor industry, according to a government filing, reported by Reuters on Monday. The move underscores China’s ambition to achieve self-sufficiency in chip production amid ongoing tensions with the United States.

The new fund, known as the third phase of the China Integrated Circuit Industry Investment Fund (Big Fund), is the largest of its kind established by the government. It has a registered capital of 344 billion yuan and is managed by the Beijing Municipal Administration for Market Regulation.

The Ministry of Finance holds the largest stake at 17 per cent, followed by China Development Bank Capital at 10.5 per cent. Five major state-owned banks also contribute around six per cent each to the total capital.

This push comes after the US imposed export controls on chip technology, citing national security concerns. It also aligns with President Xi Jinping’s emphasis on domestic chip production independence.

The Big Fund has previously supported leading Chinese chipmakers like Semiconductor Manufacturing International Corporation (SMIC) and Hua Hong Semiconductor.