In a bold retort to the United States’ persistent attempts to curb China’s chip production, China is gearing up to launch a state-backed fund aimed at bolstering its semiconductor industry, according to a Reuters report. This ambitious initiative, the third of its kind from the China Integrated Circuit Industry Investment Fund, seeks to raise a whopping 300 billion yuan ($41 billion), surpassing its previous two funds that raised 138.7 billion yuan ($19 billion) in 2014 and 200 billion yuan ($27 billion) in 2019.

The timing of this news couldn’t be more poignant, coming mere days after Huawei, the Chinese electronics titan, unveiled its latest smartphone, the Mate 60 Pro, equipped with homegrown chips. These chips, the Kirin 9000s, were co-developed with chipmaker Semiconductor Manufacturing International Corp (SMIC), marking a significant stride in China’s semiconductor capabilities. This development stands in stark contrast to recent moves by the US, Japan, and the Netherlands to limit China’s access to chip technology and hamstring their production capabilities.

China’s Bold Moves in Semiconductor Industry

Despite efforts by the United States to limit China’s chip production, the Asian giant is taking significant steps to bolster its semiconductor industry. Recently, China announced the launch of a state-backed fund with the aim of raising 300 billion yuan ($41 billion), according to a report from Reuters. This fund represents the third endeavour from the China Integrated Circuit Industry Investment Fund, with previous funds raising substantial amounts in 2014 and 2019.

A Massive Injection of Funds

Contributing to this fund is China’s finance ministry, which is expected to provide about 60 billion yuan ($8 billion). However, other contributors have not been disclosed yet. In the past, significant contributors included China Telecom and China National Tobacco Corporation. The key focus of this fund will be the creation of instruments for chip manufacturing, an area that has seen increasing competition and strategic importance globally.

Huawei’s Role in Chip Production

This news comes hot on the heels of an announcement by Chinese electronics firm, Huawei, regarding its latest smartphone, the Mate 60 Pro. This device is powered by a homegrown chip, demonstrating China’s growing prowess in semiconductor technology. Huawei partnered with Semiconductor Manufacturing International Corp (SMIC) to create the new Kirin 9000s chip, as reported by analysis firm TechInsights. This chip, built using SMIC’s high-level 7nm technology, appears to provide the Mate 60 Pro with impressive download speeds surpassing those of typical 5G phones.

Standing Defiant Against International Restrictions

Interestingly, the launch of the Mate 60 Pro and the establishment of this new fund stand in stark contrast to the international efforts to restrict China’s chip access and limit their production capabilities. These restrictions have been led by countries like the US, Japan, and the Netherlands. As recently as August, President Biden signed an executive order further limiting investments in Chinese firms dealing with technology such as semiconductors. Huawei, in particular, has been a target of these restrictions, with a ban on licenses for exporting US tech to the Chinese firm implemented in January.

Takeaways

Despite international efforts to restrict China’s semiconductor industry, the country is making significant strides in self-reliance and innovation. The launch of the new state-backed fund and Huawei’s new chip demonstrate China’s intention to become a leading player in the global semiconductor industry. These developments, however, also highlight the increasing tech divide and competition between the US and China, potentially leading to a more fragmented global tech landscape.