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China is raising up to $31.5 billion to fuel chip vision

The secretive China IC Fund plays a key role by steering overall investment and strategy

Bloomberg 

Semiconductor
A researcher plants a semiconductor on an interface board during a research work to design and develop a semiconductor product at Tsinghua Unigroup research centre in Beijing, China. Photo: Reuters

China’s government aims to raise as much as 200 billion yuan ($31.5 billion) to invest in homegrown chip companies and accelerate its ambition of building a world-class semiconductor industry, people familiar with the matter said.

The state-backed China Integrated is in talks with government agencies and corporations to raise at least 150 billion yuan for its second fund vehicle but is angling for up to 200 billion yuan, the people said, asking not to be identified talking about a plan that hasn’t been publicised. It intends to begin deploying capital in the second half of the year, they added.

The firm will again invest in a wide range of sectors from processor design and manufacturing to chip testing and packaging, potentially benefiting industry leaders from telecoms gear makers and to major players such as the The first fund —about 140 billion yuan — had gone toward more than 20 listed companies, including and contract chipmaker Semiconductor Manufacturing International, the people said.

Smaller chip players gained in the afternoon. Integrated circuit manufacturer Jiangsu Changjiang Electronics Technology climbed as much as 6.2 per cent in afternoon trading in Shanghai, while chip packager China Wafer Level CSP gained almost 5 per cent. China’s trying to reduce a reliance on some $200 billion of annual semiconductor imports, which it fears undermines national security and hampers the development of a thriving technology sector. The country envisions spending about $150 billion over 10 years to achieve a leading position in design and manufacturing, an ambitious plan that U.S. executives and officials have warned could harm American interests.

While officials have suggested their initial vision of attaining pole position in chips may have been unrealistic, the government remains intent on finding ways to reduce imports.

Established in 2014, the secretive China IC Fund plays a key role by steering overall investment and strategy. For its second fund, the state-backed outfit will again turn to central and local government agencies as well as the government-backed enterprises that contributed previously, the people said.

First Published: Fri, March 02 2018. 00:50 IST
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