In a move aimed at strengthening its semiconductor industry, China's Guangdong province has announced the establishment of a $1.5 billion chip fund. This initiative is a significant step towards achieving semiconductor self-reliance, a goal that has become more urgent due to escalating export restrictions from the US.
China's commitment to supporting its chip industry
The Guangdong Semiconductor and Integrated Circuit Industry Equity Investment Fund, now in its second phase, demonstrates China's determination to support its chip industry in the face of international pressures. Led by Guangdong's provincial government and two municipal government funds, this initiative clearly signals China's commitment to achieving technological independence.
Regional efforts to boost the semiconductor sector
This move by Guangdong is not an isolated one. Similar efforts are being made across China, including the establishment of Shanghai's semiconductor investment fund in 2016. These regional strategies align with Beijing's broader goals, highlighting a national consensus on the importance of the semiconductor sector.
Global recognition of the strategic importance of semiconductors
Interestingly, the US has also adopted a similar strategy with its 2022 Chips and Science Act, demonstrating a global recognition of the strategic importance of the semiconductor industry. The act promises subsidies for chip projects, indicating a global race towards achieving semiconductor prowess.
Financing and local government involvement
The Guangdong fund is the second phase of the initiative, following a successful first phase that was initiated in December 2020. The current phase is primarily financed by Guangdong Yuecai Holdings, emphasizing the role of local government in driving technological advancements. This fund serves as a local counterpart to China's National Integrated Circuit Industry Investment Fund, also known as the Big Fund, which has played a crucial role in China's semiconductor progress despite various challenges.
A comprehensive approach to semiconductor development
China's approach to semiconductor development is comprehensive, involving both the state and private sectors. This "whole-nation" strategy is not only aimed at advancing technology but also serves as a response to intensified US trade sanctions. Recent US export control rules have further emphasized the urgency of China's efforts. While the path to self-reliance in semiconductors may be long, China is demonstrating its determination. As the industry continues to evolve, the implications of these developments on global technology and trade dynamics will be profound and far-reaching.
