Advertisement
Semiconductors
TechTech War

Tech war: Guangdong sets up new US$1.5 billion chip fund as China keeps financing gates open for semiconductor projects

  • Phase II of the Guangdong Semiconductor and Integrated Circuit Industry Equity Investment Fund, was initiated by the provincial government
  • The Guangdong fund is a local version of the China National Integrated Circuit Industry Investment Fund, also known as the Big Fund

Reading Time:2 minutes
Why you can trust SCMP
3
Guangdong sets up new US$1.5 billion chip fund as semiconductor push continues. Photo: Shutterstock
Ann Caoin Shanghai

The southern province of Guangdong has set up a new 11 billion yuan (US$1.5 billion) chip industry fund in a fresh sign that the country will continue to pump money into achieving greater semiconductor self- reliance amid escalating US export restrictions.

The chip industry fund, Phase II of the Guangdong Semiconductor and Integrated Circuit Industry Equity Investment Fund, was initiated by the provincial government’s own fund and two municipal government funds, according to information from Tianyancha, a Chinese corporate data provider.

Guangdong is among several local governments trying to align regional industry development with Beijing’s priorities. For example, Shanghai’s municipal government set up a semiconductor industry investment fund in 2016, and its existing capital base is 28.5 billion yuan.

The US has also borrowed a page from Beijing’s playbook of using state funds to support strategic projects with the 2022 Chips and Science Act, which promises subsidies for chip projects. The first semiconductor grant will award US$35 million to the American subsidiary of British aerospace firm BAE Systems, the US Commerce Department said last week.

Guangdong set up Phase I of the fund in December 2020, and it has already set aside 10 billion yuan of investment for related chip projects in the province. It does not list the projects it has supported.

The Phase II fund is mainly financed by Guangdong Yuecai Holdings, a financial holding enterprise directly under the Guangdong government, which owns over 90 per cent of the fund. Two city-level industry investment funds, from Dongguan and Zhongshan, both own a 4.5 per cent stake in the new fund.

The Guangdong fund is a local version of the China National Integrated Circuit Industry Investment Fund, also known as the Big Fund. Despite a raft of corruption scandals, China has decided to continue to provide liquidity for selected chip projects, including Yangtze Memory Technologies Co, China’s top memory chip maker, and Semiconductor Manufacturing International Corp, the country’s top foundry.

Advertisement