Zhongshanghai Adds 1.3 Trillion KRW to Semiconductor Fund to Support Technology Independence

The city of Shanghai, China, is injecting an additional 6.9 billion yuan (approximately 1.3 trillion won) into a semiconductor industry investment fund to support domestic technological self-reliance.

On the 19th, the Hong Kong South China Morning Post (SCMP), citing the corporate information platform Qichacha, reported that the Shanghai Semiconductor Industry Investment Fund (SSIIF) raised 6.9 billion yuan from investors composed of state-owned enterprises, increasing its capital to 14.5 billion yuan.

SCMP explained, "Through the capital increase, the fund's capacity to finance essential projects that help China become self-reliant in the semiconductor sector will be strengthened," adding that "this signifies Shanghai's dedication to semiconductor technology development."

Based on the recent capital investment, Shanghai Science and Technology Venture Capital Group holds a 35% stake as the largest shareholder, while Shanghai Guosheng Group and Shanghai International Group each hold 18%.

SSIIF is a type of 'big fund' established by Chinese local governments to strengthen the semiconductor industry, with investments starting in 2016. In the early stages of the fund, it invested tens of billions of yuan in SMIC, China's largest foundry company, HLMC, a subsidiary of Huahong Group, and ACM Research Shanghai, a subsidiary of wafer processing solutions company ACM Research.

Subsequently, in May 2020, as a second investment round, it received 5.4 billion yuan in capital investment from six investors, including Shanghai Science and Technology Venture Capital Group, Shanghai Guosheng Group, and Shanghai International Group. The capital size reached 7.6 billion yuan in 2022.

SCMP stated, "Due to U.S. export controls preventing Chinese companies from accessing advanced semiconductor technology, the Chinese government has provided substantial subsidies to major companies to develop domestic alternative technologies." An investigation of the financial statements of 25 semiconductor companies revealed that government subsidies to these companies amounted to 20.53 billion yuan last year alone, representing a 35% increase compared to 2022.