To boost chip industry, China to launch new $40b State fund

Subject: Economy

Section: External Sector

Context:: China is set to launch a new state-backed investment fund that aims to raise about $40 billion for its semiconductor sector.

Key Points:

China is set to launch a new state-backed investment fund that aims to raise about $40 billion for its semiconductor sector.
It is likely to be the biggest of three funds launched by the China Integrated Circuit Industry Investment Fund, also known as the Big Fund.
The main area of investment will be equipment for chip manufacturing
Why is it being launched?
- President Xi Jinping has long stressed the need for China to achieve self-sufficiency in semiconductors.
- That need has become all the more pressing after Washington imposed a series of export control measures over the last couple of years, citing fears that Beijing could use advanced chips to boost its military capabilities.
Over the years, the Big Fund has provided financing to China’s two biggest chip foundries
Despite those investments, China’s chip industry has struggled to play a leading role in the global supply chain, especially for advanced chips.