Mon. Dec 23rd, 2024
China's $47 Billion Semiconductor Fund Puts Chip Sovereignty At Forefront

China has closed its third state-run investment fund in a bid to strengthen its semiconductor industry and reduce its reliance on other countries for both wafer use and production, prioritizing so-called chip sovereignty.

China’s National Integrated Circuit Industry Investment Fund (commonly known as the “Big Fund”) had two funds: Big Fund I (2014-2019) and Big Fund II (2019-2024). The latter was significantly larger than the former, but Big Fund III, at 344 billion yuan (about $47.5 billion), is larger than both. Official documents He revealed.

Exceeded Expectationsand Huawei’s recent Increasing dependency The scale of Big Fund III’s offering to Chinese suppliers underscores the country’s goal of becoming self-sufficient in semiconductor production. Chip Wars The conflict between China and the West goes both ways.

The U.S. and Europe are not the only countries looking to reduce their reliance on longtime tech rivals: China also has reason to worry about supplies, and exports from the U.S. and its partners are not its only concern. At risk.

When it comes to semiconductor manufacturing, Taiwan is the biggest concern. If China were to seize Taiwan’s manufacturing capacity, the US and its allies would be at a huge disadvantage. Taiwan Semiconductor Manufacturing Company (TSMC) currently produces about 90% of the world’s most advanced semiconductors.

Meanwhile, Bloomberg reported that Netherlands-based ASML and TSMC Disable chip making machines If China invades Taiwan.

China: 60% of legacy chips U.S. Secretary of Commerce Gina Raimondo recently declared that it was the type used in cars and home appliances.

The chip wars have spanned both legacy and advanced chips with mixed results.

According to the official Chinese view, U.S. policy BackfireExports from major U.S. semiconductor manufacturers are falling, Share that view.

Either way, companies like Nvidia are walking a delicate balance between “maintaining the Chinese market and navigating tensions with the U.S.,” Hebe Chen, a market analyst at IG, said recently. ReutersThe company customized three types of chips for China after U.S. sanctions banned the export of cutting-edge semiconductors, but competition forced it to accept lower prices than it had hoped for.

But the commercial struggle for Western chipmakers may be worth the cost if they can prevent China from developing and accessing more advanced chips as quickly as its rivals.

There are signs that the restrictions could hit China where it hurts, such as if Chinese AI companies are denied access to cutting-edge chips from Nvidia or if it makes it harder for China’s leader, SMIC, to make its own chips.

Big Fund III itself shows that China is feeling the pressure. ReportsThe funding, like the previous round, will be used for large-scale wafer manufacturing, but also to make high-bandwidth memory chips, known as HBM chips, which are used in AI, 5G, IoT, and more.

But its size is its greatest feature.

support Six major national banksBig Fund III exceeds the $39 billion in direct incentives the U.S. government has earmarked for semiconductor manufacturing through 2015. CHIPS Act. However, the total federal funding is $280 billion.

The €43 billion EU chip bill seems small compared to South Korea’s. $19 billion aid packageand it appears the market has taken notice.

Big Fund III news Rally As for the stakes in Chinese semiconductor companies that will benefit from this new capital, as Bloomberg points out, Beijing’s past investments Not always rewarded.

In particular, “China’s top leadership I was annoyed. After years of failure to develop semiconductors capable of replacing American circuits, the former boss of Big Fund was fired. investigated “He was indicted on charges of corruption,” the media noted.

Even without corruption, making big changes in semiconductor manufacturing is a slow process, and it’s been slow in Europe and the US, but there are some interesting new developments.

For example, French deep tech startup Diamfab is working on developing diamond semiconductors that could aid in the green transition, particularly in the automotive industry. Though it’s still a few years away, this is the kind of Western innovation that will be just as interesting to track as Chinese incumbents are.

Additional reporting by Rita Liao.