This will be the largest of three investment funds set up by the China Integrated Circuit Industry Investment Fund (also known as the Big-Fund), as it aims to raise 300 billion yuan ($41 billion), far exceeding previous programs in 2014 and 2019, which raised 138.7 billion yuan and 200 billion yuan, respectively.

Chinese President Xi Jinping has long stressed the need to achieve self-sufficiency in semiconductors, a need that has become more urgent as Washington and its allies have imposed a series of export restrictions in recent years, citing concerns that Beijing could use advanced chip technology to bolster its military capabilities.

In October 2022, the US announced sweeping export restrictions aimed at limiting China’s access to the most advanced chipmaking equipment, with US allies Japan and the Netherlands taking similar steps.

The government has approved plans for a $40 billion fund in recent months, with the Chinese Ministry of Finance considering contributing 60 billion yuan, but other investors have not been disclosed.

The fundraising process could take several months, according to Reuters, and it is not yet clear when the fund will be launched or if the plan will change further.

Major investors in the previous two programs included the Ministry of Finance, China Development Bank, National Tobacco Corporation and China Telecom.

Over the years, Big-Fund has provided financing to China's largest chipmakers, including SMIC, Hua Hong Semiconductor, Yangtze Memory Technologies and several smaller companies.

Yet despite massive investment, China's chip industry is still struggling to play a leading role in the global supply chain, especially for advanced microprocessors.

(According to Reuters)