by Will Kessler
The Chinese Communist Party has launched a $47.5 billion state-backed investment fund to strategically boost the semiconductor industry in competition with the US, Reuters reported on Monday.
The 344 billion yuan investment is the largest of the three funds established: the first established in 2014, providing 138.7 billion yuan of capital, and the second in 2019, providing 204 billion yuan, According to to Reuters. China subsidizes its semiconductor industry in a bid to compete with the U.S. in producing the technology, and the chips show great potential for both military and consumer apply.
China’s latest investment will focus on improving domestic chip-making equipment, where the United States currently has an advantage, according to Reuters. Seventeen Chinese entities are listed as investors in the so-called “large fund”, with the two largest being the country’s Ministry of Finance and the capital of the China Development Bank.
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The Biden administration has done this as well wanted subsidizing the U.S. semiconductor industry and its growth through the $280 billion Chip and Science Act signed into law in 2022, which authorized funding for both research and manufacturing. The US currently has advantage in the chip industry’s intellectual property, while China controls enormous amounts of the resources needed to assemble them.
Department of Commerce announced in April that it would provide approximately $6.6 billion in direct financing and $5 billion in loans to Taiwan Semiconductor Manufacturing Company. In March, Biden also visited the campus of chipmaker Intel in Arizona, where exposed $8.5 billion in direct financing and $11 billion in loans for in-state facilities for the company, even as the project schedule continues to drag on.
The United States has also imposed a number of restrictions aimed at limiting China’s access to American chip technology, including: impressive October 2022 restrictions that blacklisted many Chinese companies from working with US companies. In October 2023, the Biden administration increased restrictions, closing loopholes in current restrictions to make it even more tough for China to import equipment that could facilitate the country produce more advanced semiconductor chips.
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Will Kessler is a reporter for the Daily Caller News Foundation.
Photo “Xi Jinping” by Bendo data. Cover photo CC BY 4.0 “Printed Circuit Board” by Muffin Creativity.
