China Puts $27 Billion into Making Its Own Chips, Despite US Tech Limits
China is gearing up its technological advancement efforts by setting up a colossal chip fund, aiming to raise over $27 billion. This initiative, the largest of its kind, seeks to foster the development of cutting-edge technologies, particularly in the semiconductor sector. This move is seen as a direct response to the United States' efforts to limit China's technological progress, especially in chips and artificial intelligence.
The fund, known as the Big Fund, is in the process of securing capital from various sources, including local governments and state enterprises. This third iteration of the fund is expected to surpass its predecessor's 200 billion yuan, reflecting a significant escalation in China's investment in semiconductor self-reliance.
Key investors in the fund include:
- the governments of Shanghai and other cities,
- China Chengtong Holdings Group, and
- State Development and Investment Corp.
This strategic push comes as the U.S. is rallying its allies to tighten restrictions on China's access to semiconductor technology. The Big Fund is central to China's strategy to counter these restrictions and is supported by investments from the governments of cities like Shanghai, among others.
This initiative is part of a broader "whole nation" approach advocated by President Xi Jinping, aiming to pool resources across the country for major technological advancements. The fund will not only finance other funds (creating a "fund of funds" structure) but will also directly support local firms in the semiconductor industry.
Despite its ambitious goals, the fund operates with a level of secrecy and has faced challenges, including a slowdown in investments following an anti-graft probe in 2022 - i.e. crackdown on financial corruption, investigating over four times as many officials in three years, under President Xi Jinping's directive to mitigate risks from financial sector instability.
Is this the comeback for chinese techs?
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SFRE Keith : The valuation of Chinese tech is very attractive.
Ziet InvestsOP SFRE Keith: it does look like that, isn’t it? :P
But investing is always just beyond the financials….it’s hard to quantify the qualitatives (like politics)
SFRE Keith Ziet InvestsOP: Yes, indeed. Politic uncertainty alwsys a major concern for China Market.
However, for $Alibaba (BABA.US)$ and $JD.com (JD.US)$ $JD.com (JD.US)$, the valuation is just too attractive to ignore.
大白兔 SFRE Keith: You don't know China
SFRE Keith 大白兔: Mind to share your view on China Market?
大白兔 : China's politics is the cornerstone for its steady development to the present day, and only then can political stability unite.
SFRE Keith : Yes. Indeed. Politic stability did contribute to China success. But, as international investors, we value the growth of individual companies, which requires political certainty that lets companies plan ahead and grow.