China’s third state-backed 344-billion-yuan ($47.5 billion) investment fund, which is aimed at propelling the country’s self-sufficiency in chipmaking, has started investments by backing two new funds amid an intensifying crackdown from the US.
The third fund, also known as Big Fund III, has teamed up with SINO-IC Capital — which is the sole fund manager of Big Fund II and Big Fund I — injecting 93 billion yuan ($12.7 billion) and 93 million yuan ($12.7 million) respectively into Huaxin Dingxin (Beijing) Equity Investment Fund, an investment fund entity freshly set up on December 31 2024, according to multiple local news reports, citing data from Chinese company information provider Qichacha.
Big Fund III together with SDIC Venture Capital — the investment management firm founded by state-owned investment holding group State Development and Investment Corporation (SDIC) — have also pumped in 71 billion yuan ($9.7 billion) and 71 million yuan ($9.7 million) respectively into a new fund titled Guotou Jixin (Beijing) Equity Investment Fund, per the local reports.
Big Fund III, set up in May 2024, is the third phase of China’s National Integrated Circuit Industry Investment Fund. As the country’s largest-ever semiconductor-focused investment fund, Big Fund III has a registered capital of 344 billion yuan ($47.5 billion), which is more than the combined sum for Big Fund I and Big Fund II.
The new investments come a month after the US announced a package of rules in December 2024 to strengthen its export controls that aim to “further impair” China’s capability to produce advanced-node semiconductors.
Part of the rules include new controls on semiconductor manufacturing equipment and software tools; new controls over high-bandwidth memory that is critical to both AI training and inference; and the addition of 140 entities that help to further China’s advanced chip goals.
In response to the new curbs, China said the move was “a typical economic coercion and non-market practice”, Chinese state media reported on December 3. The Ministry of Commerce said in a statement that China will take necessary measures to resolutely safeguard its legitimate rights and interests.
