China’s “Big Fund” Raises Record $47.5 Billion for Semiconductor Industry
China’s so-called “Big Fund,” initially established by the Chinese authorities in 2014, has completed its third fundraising phase with a record $47.5 billion bagged. The fund is devoted to supporting the nation’s semiconductor industry. The first fundraising round, held in 2014, amassed $45 billion, while the second saw $27 billion raised in 2019.
Bloomberg reported that the third fundraising round officially closed on May 24. The exact name of the fund, National Integrated Circuit Investment Fund, although accurately representing its purpose, might seem cumbersome. Western sources prefer to nickname it simply as Big Fund III. To recall, in March, the People’s Republic of China (PRC) had planned to raise over $27 billion for the semiconductor industry’s development needs. Thus, the $47.5 billion end result significantly exceeded expectations.
While initial talks in early spring focused on minimal involvement from the PRC’s central government in the fund, Bloomberg explains that the Ministry of Finance ended up being the biggest investor. Local authorities from Beijing and Shenzhen also contributed significantly, especially eager to support Huawei Technologies, a company currently dealing with Western sanctions. The fund’s resources can be used to build new chip-manufacturing enterprises for this tech giant.
The first phase of Big Fund, about a decade ago, facilitated considerable advancement for SMIC and YMTC. The second phase in 2019, allocating $27 billion, focused on purchasing significant stocks of Chinese chip manufacturers but did not specifically support one single company. The fund allocation strategy for the third phase still remains uncertain. This news, however, has already spurred growth in the stocks of Chinese chip manufacturers operating within PRC. For instance, SMIC’s stock price increased by 5.4%, while Hua Hong Semiconductor, also a Chinese contract chip manufacturer, saw a 6% jump.
