Asia Express - East Asian ICT
China Pours Another US$42 Billion into Domestic Semiconductor Industry
September 12, 2023

China is set to launch the third phase of its National Integrated Circuit Industry Investment Fund, commonly known as the "Big Fund," according to Reuters on September 6. This new phase is planned to have a financing scale of 300 billion RMB (US$41.7 billion; US$1= 7.2 RMB) with an aim to boost the semiconductor industry and accelerate China's pace in catching up with competitors like the United States.

Sources stated that the third phase of the Big Fund received approval from Beijing authorities several months ago. One of its main investment focuses will be semiconductor manufacturing equipment. The Chinese Ministry of Finance plans to contribute 60 billion RMB (US$8.3 billion) to the third phase of the Big Fund, with the rest of the funds to be raised from other investors. The specific contributors are not yet clear.
It is indicated that the scale of the third phase of the Big Fund will surpass the first two phases. Official reports from China mentioned that the first two phases raised approximately 138.7 billion RMB (US$19.3 billion) and 200 billion RMB (US$27.8 billion), respectively. The China Securities Journal reported earlier that the investment scope of the first phase of the Big Fund included integrated circuit (IC) manufacturing accounting for 67%, design accounting for 17%, packaging and testing accounting for 10%, and equipment materials accounting for 6%. The investment direction of the first phase of the Big Fund prioritized supporting the IC chip manufacturing industry while also considering industries such as chip design, packaging and testing equipment, and materials.
Following an expected period of restrained growth in 2023, the global semiconductor market's value is projected to reach US$576 billion in 2024, up 11.8% year-on-year, as reported by MIC (Market Intelligence & Consulting Institute). Established in 1987, MIC is a division of the III (Institute for Information Industry), a prominent government think tank, and one of the leading IT research institutes in the Asia Pacific region.