China Sets Up Third Investment Fund to Boost Semiconductor Industry

State-backed funding to bolster domestic chip production and reduce reliance on imports

China Integrated Circuit Industry Investment Fund Phase III Co Ltd (Phase III Fund) launched

China has established a third state-backed investment fund dedicated to supporting its semiconductor industry and reducing its reliance on imported chips. The China Integrated Circuit Industry Investment Fund Phase III Co Ltd (Phase III Fund) was officially launched on September 5, 2023.

The Phase III Fund is part of China's broader efforts to achieve self-sufficiency in its semiconductor industry. The country has been doubling down on investments in domestic chip production in recent years, amid concerns over the potential impact of US sanctions and geopolitical tensions.

The Phase III Fund will invest in the entire value chain of the semiconductor industry, from research and development to manufacturing and packaging. It is expected to provide funding for both established companies and startups that are developing innovative chip technologies.

China's semiconductor industry has made significant progress in recent years, but it still relies heavily on imports for high-end chips used in smartphones, data centers, and other advanced applications.

The Phase III Fund is the latest in a series of government initiatives aimed at supporting the domestic semiconductor industry. In 2014, China launched the first China Integrated Circuit Industry Investment Fund (CICIIF), followed by the Phase II Fund in 2019.

The launch of the Phase III Fund is a further indication of China's determination to become a global leader in the semiconductor industry and reduce its reliance on foreign imports.