China is preparing a new state investment fund that is expected to raise around $40 billion for the semiconductor manufacturing sector, said two informed sources, and support the plan for self-sufficiency in key technologies.
The new fund is expected to raise 300 billion yuan ($41 billion), thus surpassing its predecessors established in 2014 and 2019, which, according to government reports, raised 138.7 billion and 200 billion yuan, respectively.
Chip production will be among the main areas of investment, the informed sources said, and is likely to be the largest in a trio of funds established by the Chinese Investment Fund for the Integrated Chip Sector, more commonly known to the public as the Big Fund.
President Xi Jinping has long emphasized that China must be self-sufficient in semiconductor production, which has become even more important since the U.S. significantly tightened export controls, claiming that Beijing could use new technologies to strengthen its military.
Chinese authorities approved the establishment of the new fund in recent months, the two sources said. The Ministry of Finance plans to contribute 60 billion yuan to the fund, according to one source, while other investors remain unknown.
All sources declined to disclose their identities as the discussions are confidential. The State Information Office and the Chip Industry Fund did not immediately respond to Reuters’ request for comment on the establishment of the new fund.
The fundraising process is likely to take months, and it is unclear when the fund will be launched or whether the plans will be modified, the two sources said.
Investors in the two funds established by the industry investment instrument include the Ministry of Finance and wealthy state-owned companies, such as China Development Bank Capital, China National Tobacco Corporation, and China Telecom, Reuters reports.
