Tech war: Beijing sets up US$1.2 billion semiconductor fund as China splurges on chips

Beijing set up the new chip fund under the state-owned Zhongguancun Development Group, joining a slew of chip investment funds across China

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China has been pouring money into its semiconductor industry in an effort to reduce reliance on foreign manufacturers. Photo: Shutterstock

Published: 7:00pm, 30 Aug 2024Updated: 3:57pm, 25 Sep 2024

The Beijing municipal government has set up a new semiconductor investment fund, as China ramps up support for its chip industry amid intensified trade tensions with the US.

The state-owned Zhongguancun Development Group established the Beijing Integrated Circuit Industry Investment Fund on Tuesday with a registered capital of 8.5 billion yuan (US$1.2 billion), according to information available on Chinese corporate database Qichacha.

The Beijing government started the Zhongguancun firm in 2010, and the fund will be run by a subsidiary registered as Beijing Zhongguancun Capital Fund Management, according to Qichacha.

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The new fund in Beijing joins a slew of initiatives from local Chinese governments aimed at bolstering the country’s chip sector. The most notable among them is the China Integrated Circuit Industry Investment Fund, a national effort known as the “Big Fund”.

China in May set up the third phase of the Big Fund with a registered capital of 344 billion yuan, making it the country’s largest-ever chip investment fund, nearly on par with the US$53 billion in incentives under the Chips and Science Act signed into law by US President Joe Biden in 2022.

Analysts expect the Big Fund III to be a boon for companies across the country’s semiconductor supply chain, including equipment and material suppliers, and make investments related to advanced packaging.

The local Shanghai government recently also injected nearly US$1 billion into its own chip fund, the Shanghai Semiconductor Industry Investment Fund, after establishing in July a 45 billion yuan Integrated Circuit Industry Parent Fund.