China Will Have $45-70 Billion in Funds to Catch Up With Semiconductors

China’s first Big Fund to invest in semiconductors was made in 2014 with around $19-22 billion. The Phase 2 fund is being put together now and is already at $28.9 billion and could reach $47 billion. The fund is called the National Integrated Circuit Industry Investment Fund Phase II Co., Ltd. (National Big Fund Phase II).

At a September semiconductor industry summit, the Big Fund’s manager revealed that Phase II will focus on etching machines and film, test and cleaning equipment. The goal is to build an independent, self-sufficient and “controllable” industrial chain for the Chinese IC industry.

By the end of September 2018, the Phase I had invested in 77 projects and 55 integrated circuit enterprises.

The Ministry of Finance with 22.5 billion yuan (with $3.18 billion) is the largest shareholder, local governments are also transferring funds.

Shareholders include China’s Ministry of Finance, Shanghai Guosheng (Group) Co., Ltd., China National Tobacco Corporation, China Telecom, and a host of local investment funds.

China is lagging badly in semiconductor technology and is dependent on the US and Europe for this technology. China imported US$260 billion worth of semiconductors in 2017, more than its $162 billion imports of crude oil.

China aims to produce 40% of the semiconductors it uses by 2020 and 70% by 2025. In 2018, 16% of the semiconductors used in China were produced in the country and only half of those are made by Chinese firms, according to a report by the Center for Strategic and International Studies.

Written By Brian Wang,