China’s Ambitious Countermove Against US Tech Restrictions

China is actively mobilizing resources for its largest-ever chip fund, the National Integrated Circuit Industry Investment Fund, commonly known as the Big Fund.

It aims to raise over $27 billion, surpassing the 200 billion yuan of its second fund, signalling an intensified effort to bolster the country’s semiconductor capabilities.

The move comes as a strategic response to heightened US efforts to impede China’s technological progress, particularly in the fields of chips and artificial intelligence.

The Big Fund, overseen directly by China’s influential tech ministry, reflects a resurgent commitment to fostering technological advancements.

Also, the fund’s third phase underscores a shift in strategy, with a substantial portion of capital expected from local governments, their investment arms, and state-owned enterprises.

China's Ambitious Countermove Against US Tech Restrictions
Changxin Xinqiao Memory Technologies Inc (Credits: Forbes)

This approach aligns with President Xi Jinping’s broader vision of pooling valuable capital across the nation for pivotal projects.

Renewed Self-Reliance Amid Global Tech Restrictions

China’s push for self-reliance gains momentum as the US encourages its allies to tighten restrictions on China’s access to semiconductor technology.

The Big Fund emerges as a pivotal player in this context, with investments from key entities such as the governments of Shanghai and other cities, China Chengtong Holdings Group, and State Development and Investment Corp.

The fund’s significance is underscored by its role as the primary vehicle providing financial aid to local chipmakers, aligning with the broader goals of the “whole nation” approach advocated by President Xi Jinping.

The Big Fund’s Strategic Vision: A Catalyst for Technological Advancement

The Big Fund, established in 2014, has played a crucial role in supporting local chipmakers, including industry giants like SMIC and Yangtze Memory Technologies Co.

Yangtze Memory Technologies Co.
Yangtze Memory Technologies Co. (Credits: Forbes)

Its influence extends to formal endorsements from Beijing, providing entities with enhanced credibility and facilitating access to other potential investors and policy support.

Despite operating mostly behind the scenes, the Big Fund’s impact on China’s semiconductor landscape is undeniable. It has successfully weathered challenges, including a slowdown in investments following an anti-graft probe in 2022.

The fund’s resurgence in late 2023, marked by significant investments in companies like Changxin Xinqiao Memory Technologies Inc., demonstrates its enduring commitment to driving innovation in the semiconductor sector.

Jen Garcia
Jen Garcia
Experienced finance and business news writer, exploring market dynamics with insightful analysis and engaging storytelling.
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