China launches $47.5 billion chip fund to counter US chip restrictions

The global chip shortage may be easing, but the battle for chip supremacy between the US and China is far from over.

China recently upped the ante by establishing its biggest-ever semiconductor investment fund, a whopping $47.5 billion (344 billion yuan) chip fund dubbed "Big Fund III." This move is a clear response to US efforts to restrict China's access to advanced chips and chipmaking equipment.

The third phase of the National Integrated Circuit Industry Investment Fund, backed by the central government and state-owned entities, aims to propel China's domestic chip industry towards self-sufficiency. This isn't just about economic dominance it's a national security issue for both sides. 

The US views a robust domestic chip industry as crucial for maintaining its technological edge, while China seeks to break free from dependence on foreign chipmakers, especially in the wake of US sanctions against companies like Huawei.

This is the latest chapter in a global chip arms race, with both superpowers pouring billions into research and development. The US 2022 Chips and Science Act, for example, allocates $39 billion in grants for chipmakers as well as $75 billion in loans and guarantees.

The US also blacklisted several Chinese companies from access to advanced chips from Nvidia, which are used to train artificial intelligence models, as well as the most sophisticated chipmaking machines from the likes of ASML Holding NV and Applied Materials Inc.

Dozens of Chinese firms were added to the U.S. trade blacklist

The U.S. government has added 36 Chinese firms to its Entity List trade blacklist, including China’s top storage chipmaker YMTC, in what is its latest effort to restrict Beijing’s ability to acquire high-end US chip technology, according to a Bloomberg report. Most of the entities added are

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Despite these setbacks, China remains determined to close the chip gap. However, China's chip ambitions haven't always been smooth sailing. Previous investments haven't yielded the desired results in terms of advanced chip development. Additionally, corruption scandals have plagued past initiatives. 

That said, Big Fund III could be a turning point, supporting efforts to develop advanced chips and nurture a network of domestic chip companies that can rival US giants.

China launches a 30 billion yuan semiconductor fund to promote the chip industry

Despite the United States’ continuous pressure on the semiconductor supply chain market to Chinese industries, China has continued to make sizeable investments to boost its self-reliance in the semiconductor industry. One such investment is a whopping 30 billion yuan ($4.37 billion) set to be launched by China’s southern Guangdong

TechloyEmmanuel Oyedeji