China recently kicked off the third phase of its Integrated Circuit Industry Investment Fund – often referred to as “Big Fund III” – by injecting a whopping 344 billion yen (around 47 billion yen dollars) to support his country’s semiconductor sector. Officially operational since December 31, 2024, the fund has set aside an initial CN¥93 billion ($12.685 billion) for companies focused on chipmaking materials and production equipment.
Managed by Huaxin Investment Management, this latest tranche marks Beijing’s biggest push for semiconductor autonomy, surpassing the total of the first two rounds combined. In 2014, the initial phase raised 138.7 billion yen ($18.9 billion), then 204.1 billion yen ($27.8 billion) in 2019.
China’s decision to inject these funds stems from tightening U.S. export controls that limit access to cutting-edge chip technologies. Previous investment rounds have already yielded some victories, such as SMIC’s deployment of 7nm chips for Huawei’s Mate 60 phones and YMTC’s production of memory chips for the Pura 70 range.
However, the program has not been without setbacks. In 2022, corruption investigations have targeted several fund managers and officials. Additionally, the Wuhan Hongxin Semiconductor Manufacturing project failed despite significant government funding and officially closed in June 2021 without having delivered a single commercial chip.
To put things in perspective, while $12.685 billion is no small feat, it’s not enough to surpass the annual R&D budgets of major chip equipment makers such as ASML ($4.308 billion in 2023) and Applied Materials ($3.233 billion in 2024). Overall, the total size of the fund is around the $53 billion mandated by the US CHIPS Act.
According to Linghao Bao, senior analyst at Trivium China, U.S. export restrictions could spur even faster innovation in China as domestic companies seek local technology chips to replace foreign solutions. A concrete example: Alibaba has reportedly set its sights on Huawei as a source of supply for artificial intelligence chips, now that Nvidia is facing sales constraints in the Chinese market.
