China is said to launch a $40 billion state-backed investment fund with the goal to develop domestic semiconductors.
According to a report from Reuters, the aim is to ramp up China’s home-grown chip market in an effort to catch up with the U.S. and other countries and stave off the export restrictions that have hindered the country from getting access to high performance computing semiconductors.
Known as China Integrated Circuit Industry Investment Fund, or Big Fund, a main area of investment will be equipment for chip manufacturing — one of the main areas hit hardest by the United States’ export restrictions in China.
The report said the fundraising process is likely to take months. Previous financing from the Big Fund helped give money to the largest chip foundries in China Semiconductor Manufacturing International Corporation (SMIC) and Hua Hong Semiconductor as well as to flash memory maker Yangtze Memory Technologies.
China restrictions
China export restrictions started during the Trump Administration when it put communications equipment maker Huawei on its Entity List under the Department of Commerce. The move virtually blacklisted U.S. companies from doing business with Huawei. Initially, the move was made to curb 5G equipment from being used for national security reasons. Later, it became a rallying cry to curb the advance of Chinese semiconductor manufacturing.
The U.S. then expanded the restrictions to pure-play foundry SMIC and other companies. Later, the USDOC expanded restrictions on high-performance computing such as CPUs and GPUs, which includes not only domestic companies in mainland China but also U.S.-based suppliers and U.S. citizens from helping support China’s chip development.
Early this year, the U.S. stopped approval of export licenses for companies looking to do business with Chinese electronic equipment vendor Huawei. As a result, DRAM makers like SK Hynix and Samsung have considered selling their fabs because they can’t get access to semiconductor equipment.
Due to these restrictions, DRAM makers that have fabs in China such as SK Hynix and Samsung have considered selling their fabs because they can’t get access to the latest technology. However, SK Hynix said it may expand legacy processes at its Wuxi, China, fab instead of transitioning to more advanced processes.
Recently, chip firms urged the U.S. to slow the export restrictions to China due to wanting to protect their profits in the country. The Semiconductor Industry Association (SIA) said that China accounted for a third of the global chip sales and is the largest single market in the world.
