China Integrated Circuit Industry Investment Fund rumored to be raising $47 billion USD for semiconductor production
SAN FRANCISCO — A second fund to bolster China's domestic semiconductor industry a government-backed investment firm — set to be launched soon — is believed to be much greater than original thought.
The Wall Street Journal, citing unnamed sources, reported that the government-backed China Integrated Circuit Industry Investment Fund would allocate the funding to — among other things — improving China's ability to design and manufacture advanced processors and GPUs. The size of the fund, which had previously been reported to be valued at between $19 billion and $32 billion, may have been increased as the result of boiling trade tensions between China and the U.S.
State-backed funding of China's semiconductor industry has emerged as one focus of the trade tensions that have bubbled up between the two nations, with each poised to impose tariffs on billions of dollars worth of products. The U.S. claims that China's government support for its semiconductor industry is anticompetitive.
The Chinese government has in recent years stepped up efforts to create a domestic semiconductor industry to help supply its massive electronics market, signaling its intention to spend $161 billion over 10 years to further that effort. China currently imports more than $100 billion worth of semiconductors every year.
The latest China Integrated Circuit Industry Fund will follow a similar fund launched in 2014 that raised about $22 billion, according to the Wall Street Journal report.
Handel Jones, CEO of International Business Strategies, said the recent trade disputes with the U.S. have created increased urgency for China to bolster its domestic semiconductor industry. The U.S. recently slapped an export ban on Chinese telecommunications provider ZTE preventing U.S. suppliers of semiconductors and other components from selling devices to ZTE, a major customer of Qualcomm and other U.S. chip vendors.
"China needs to establish mega center design capabilities in order to be able to have a stronger design and IP ecosystem," Jones told EE Times. He added that some of Chinese fabless chip vendor HiSilicon's Kirin applications processors are, however, already competitive in global markets.
— Dylan McGrath is the editor-in-chief of EE Times.