China Launches Semiconductor Development with 64 Trillion Won Fund Establishment

Third Time Following 2015 and 2019

China has established its largest-ever semiconductor investment fund, amounting to 340 billion yuan (approximately 64.672 trillion KRW), to foster the semiconductor industry.

According to Chinese corporate information site Tianyancha, the National Integrated Circuit Industry Investment Fund, a semiconductor industry development fund in China, raised capital from the central government, state-owned banks such as the Industrial and Commercial Bank of China, and enterprises to form its third fund on the 24th.

The largest shareholder of this fund is the Chinese Ministry of Finance. Investment companies owned by local governments in Shenzhen and Beijing also contributed. Shenzhen has been providing funds to several semiconductor manufacturing plants in Guangdong Province, as companies like Huawei Technologies are facing difficulties due to U.S. semiconductor export restrictions.

Over the past decade, China has injected state capital to support domestic semiconductor companies such as SMIC. In 2015, China announced the high-tech industry promotion policy "Made in China 2025" and established a semiconductor industry development fund.

The first fund raised about 140 billion yuan, and the second fund, established in 2019, was 200 billion yuan.

Bloomberg News analyzed that the background for establishing this fund lies in China's effort to build a self-sufficient semiconductor supply chain. This is because the U.S. has urged its allies, including South Korea, the Netherlands, Germany, and Japan, to further restrict China's access to semiconductors.

The U.S. and Europe are investing approximately 81 billion dollars (about 110.5 trillion KRW) in next-generation semiconductor development, competing with China for semiconductor supremacy.