The media, citing persons who provided information on condition of anonymity, reported that China is currently seeking to raise funds in the amount of more than $40 billion to create a kind of investment base for the development of the local industry sector specializing in the production of chips and research in the relevant sphere.
Journalists, citing insiders, published data that the Chinese Integrated Circuit Industry Investment Fund, which receives support from the state, is creating the third largest investment pool in the amount of about 300 billion yuan ($41.1 billion). The Ministry of Finance of the country, according to media reports, can provide 60 billion yuan ($821 million) to this fund.
According to information provided by insiders, the integrated circuit industry investment fund has received approval to operate in the recent few months. The process of launching a new initiative to finance the development of the Chinese chip manufacturing industry will take some time. It is still unknown when the new investment pool will start functioning on a full scale, and who will join this commercial project, which is of strategic importance for the country’s economic system.
The Big Fund company, which is widely known at the regional level and at the same time is not a recognizable brand in the international space, is one of the main forces contributing to the implementation of efforts to develop an independent and independent Chinese chip manufacturing sector. Last year, regulators launched an investigation into this fund and its affiliated persons on the fact of alleged involvement in bribery. The media claim that this process should be considered in the context of Chinese officials’ search for alternatives to expensive subsidies, which are largely the reason for the appearance of several bankrupt chip manufacturers with extremely low-efficiency levels before the collapse.
Big Fund has been providing financing to the largest microschem manufacturers in China for two years, including Semiconductor Manufacturing International Corporation and Hua Hong Semiconductor, and Yangtze Memory Technologies, specializing in flash memory, and several small firms and funds.
In the context of the activation of chip production, it is extremely important for Beijing to reduce the level of technological interaction with Washington. This is due to the fact that China’s dependence on the United States in the technology sector in certain political conditions is a serious vulnerability that hinders the full development and high pace of this process. The current geopolitical situation confirms this conclusion. For example, in the first half of the summer, Washington restricted the access of Chinese companies working in the area of artificial intelligence to chips. The United States explains this decision by concerns that China may use advanced developments to modernize and strengthen its military power. Japan and the Netherlands have also taken restrictive measures of similar content.
The ongoing tension in relations between Beijing and Washington indicates that the Chinese authorities have a difficult way to go to ensure full-fledged technological sovereignty. Chinese People’s Republic President Xi Jinping has repeatedly stated the need to achieve self-sufficiency in the semiconductor sector.
Last week, Chinese state media with undisguised enthusiasm spread the news about the imminent launch of production of a new Huawei smartphone, one of the components of which is an advanced chip developed by a local company SMIC. According to experts, the form of submission of this information by Chinese journalists is a clear signal that Beijing is interested in making progress as part of efforts to replace American technology.
At the same time, the share price of companies from China specializing in the production of chips, on Tuesday, September 5, showed the dynamics of decline against the background of not the best financial indicators.
Experts note that the enthusiasm of the Chinese media about the prospects for the development of the local chip industry is excessive and does not have sufficient grounds. According to them, a bold and clear view of the future becomes blurred and more cautious when trying to answer the question of which of the manufacturers based in China will be able to challenge the strict restrictive measures imposed by Washington in order to deprive firms of an Asian country of access to American software and michroschems, as well as advanced technological processes. In this case, what is meant is not the ability to bypass the import-export control regime, but the ability to create an alternative product that allows the Chinese high-tech industry to develop independently.
Vey-Sern Ling, managing director of Union Bancaire Privee, expressed doubts about China’s ability to master advanced technologies, access to which is limited, and said that significant amounts of investment in efforts to overcome this problem will not help achieve the goal. He explains his skepticism by the fact that the supply chain is long, highly integrated, specialized, and in a state of constant improvement. According to him, China, in the context of its efforts, is fighting an uphill struggle just to stay five years behind.
