China Counters US 'Semiconductor Containment' with Record $35 Trillion Fund Creation

As the United States intensifies regulations against Chinese semiconductor companies, China has launched the creation of an investment fund exceeding $27 billion (approximately 35 trillion KRW), the largest ever, to foster its domestic semiconductor industry, Bloomberg reported on the 8th (local time).

According to multiple sources familiar with the matter, China's semiconductor industry development fund, the "Big Fund" (National Integrated Circuit Industry Investment Fund), is currently raising a third fund that surpasses the second fund amount of 200 billion yuan (approximately 36 trillion KRW) established in 2019.

Fundraising is being conducted targeting local governments, investment companies, and state-owned enterprises, with the sources indicating that the central government's direct investment amount will be very small.

Several major city governments including Shanghai, investment companies such as Qingtong Holdings Group, and the State Development & Investment Corporation (SDIC) also plan to contribute tens of billions of yuan each, with detailed fundraising negotiations expected to conclude within a few months.

This third fund creation plan comes amid recent moves by the United States to repeatedly tighten regulations to curb China's advanced semiconductor manufacturing capabilities.

Following last year's restrictions on transactions between China's largest semiconductor company SMIC and U.S. firms, the U.S. government has recently pressured allies including South Korea, the Netherlands, Germany, and Japan to strengthen controls on semiconductor equipment exports to China.

In response, China has designated independent semiconductor technology development as a top national project and is sparing no support for domestic companies such as Huawei and SMIC.

The semiconductor fund raised by the Chinese government through the "Big Fund" from 2014 to 2019 amounts to a total of $45 billion (approximately 59 trillion KRW).

However, there are interpretations that China's semiconductor technology has not yet reached a level capable of fully replacing overseas components and equipment, as testimonies have emerged that semiconductor chips installed in Huawei's latest smartphones were manufactured using technology from U.S. equipment companies.

This content was produced with the assistance of AI translation services.