China’s chip industry bolstered by acquisitions worth US$6.61 billion by government-backed fund
China, which produces over 90 per cent of the world’s smartphones, still relies heavily on imported chips, but China IC Industry Investment Fund is helping to develop the domestic industry
Acquisitions by the government-backed China IC Industry Investment Fund to help expand the country’s semiconductor industry have reached 43 billion yuan (US$6.61 billion) so far and show no signs of abating, analysts said.
“We expect the Chinese government to continue investing heavily in this industry,” said Bernstein senior analyst Mark Li, lead author of a research note about the state’s “Big Fund”.
This national fund on Monday helped Chinese contract chip manufacturer XMC break ground on the country’s first memory chip fabrication plant in Wuhan, capital of Hubei province.
Setbacks don’t derail China’s semiconductor ambitions
The fund and other domestic financing entities - the Hubei IC Investment Fund, CDB Development Fund and Hubei Technology Investment - committed to invest about US$24 billion into XMC to build up its memory production capabilities over the next five years.
With a US$22 billion budget, the China IC Industry Investment Fund serves as the main vehicle used by the state to drive the development of the domestic semiconductor industry, which continues to rely heavily on imported chips amid the country’s vast electronics manufacturing supply chain.
Li said mainland China currently produces more than 90 per cent of smartphones sold worldwide, as well the majority of personal computers and internet-linked smart television sets in the market. The country also accounted for about 59 per cent of global semiconductor demand last year.