According to information on Chinese enterprise database Qichacha, state-owned Zhongguancun Development Group has established the Beijing Integrated Circuit Industry Investment Fund, with a registered capital of 8.5 billion yuan ($1.2 billion).

Zhongguancun was founded in 2010 and the fund will be operated by a subsidiary with the registered name Beijing Zhongguancun Capital Fund Management.

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Beijing and Shanghai have set up billion-dollar funds to finance local semiconductor industries. Photo: SCMP

Beijing's new fund will join a series of local government initiatives aimed at bolstering the country's semiconductor sector, notably the "Big Fund" (China Integrated Circuit Industry Investment Fund).

In May, China's "Grand Fund" entered its third phase, with a registered capital of 344 billion yuan, becoming the country's largest chip investment fund ever, nearly on par with the $53 billion in incentives under the Chip and Science Act signed into law by US President Joe Biden in 2022.

Analysts expect the “Big Fund III” to provide a boost to businesses in the industry, from suppliers of equipment, materials to advanced packaging processes.

Meanwhile, Shanghai has also injected nearly $1 billion into the Shanghai Semiconductor Industry Investment Fund, after establishing the 45 billion yuan Integrated Circuit Industry Fund in July.

Government subsidies for semiconductor companies in China have soared as the central government redoubles its efforts to become self-sufficient. Public funding for the country’s top 25 chip companies rose 35% to 20.53 billion yuan last year from 2022, according to an analysis by SCMP.

According to a report released earlier this month by the Information Technology and Innovation Foundation (ITIF), a Washington-based research organization, large state subsidies have contributed to the growth of China's semiconductor industry, but have also led to overcapacity.

Meanwhile, SMIC - the mainland's largest chip foundry, is still nearly five years behind TSMC, ITIF said.

(According to SCMP, Yahoo Tech)

China imports record chip foundry equipment During the same period, Dutch foundry equipment maker ASML saw its exports to China increase by 21%, despite sanctions from Washington.