Tensions between the United States and China over semiconductors started with the trade war under the Trump administration and have risen under President Joe Biden's leadership as Washington seeks to undermine Beijing's efforts to develop its high-tech industry.

China will establish a $40 billion governmental fund to support the chip sector

According to two people with knowledge of the situation, China is getting ready to launch a new state-backed investment fund with the goal of raising approximately $40 billion for its semiconductor industry as the nation steps up attempts to catch up with the United States and other rivals.

The China Integrated Circuit Industry Investment Fund, often known as the Big Fund, opened three funds; this one is believed to be the largest.

In comparison, similar funds in 2014 and 2019 raised 138.7 billion yuan and 200 billion yuan, respectively, according to government reports. Its objective of 300 billion yuan ($41 billion) exceeds those years’ totals.

According to one of the two persons and a third person with knowledge of the situation, one of the major investment areas will be machinery for chip fabrication.

For a long time, President Xi Jinping has emphasized how important it is for China to become self-sufficient in semiconductors. This need has grown even more urgent because Washington implemented a number of export control regulations over the past few years, citing concerns that Beijing would exploit cutting-edge technology to improve its military prowess.

In October, the United States unveiled a comprehensive package of penalties that restricted China’s access to cutting-edge chip manufacturing machinery. U.S. allies Japan and the Netherlands also took similar action.

According to two of the people, Chinese authorities just approved the new fund.

According to one source, the Chinese finance ministry intends to provide 60 billion yuan. Other contributors weren’t immediately identifiable.

Since the conversations were private, all of the sources declined to be named.

Reuters’ requests for comment were not immediately answered by the State Council Information Office, which responds to media inquiries on behalf of the government, the finance ministry, or the Ministry of Industry and Information Technology.

Requests for comment from The Big Fund also did not receive a prompt response.



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