The Shanghai government has increased its chip investment to about $2 billion
According to local new outlets, the Shanghai government has doubled its domestic chip investment fund, with the latest funding round increasing the total to about CNY14.5 billion ($2 billion). The fund is supported by state-backed companies located in Shanghai, which contributed CNY6.9 billion to bolster China’s aspiration to lead the market, particularly as the need for advanced AI chips increases.
Established in 2016, the first phase of the Shanghai Semiconductor Industry Investment Fund has invested in the country’s largest contract chipmaker Semiconductor Manufacturing International Corp (SMIC) and Shanghai Huali Microelectronics.
China’s larger semiconductor ambitions got a $47.5 billion boost in May 2024, which, like the first two rounds of chip funding, was part of the China Integrated Circuit Industry Investment Fund, first established in 2014 and known as the “Big Fund.” The first phase of the fund distributed 138.7 billion yuan, followed by a second round of funding in 2019 that came to 204 billion yuan.
When it comes to the funding in Shanghai, Shanghai Science & Technology Venture Capital Group is the largest investor with a 35% stake, and Shanghai Guosheng Group and Shanghai International Group each own an 18% or so share. Pudong Venture Capital joined as a new shareholder with a 10.6% stake, while existing investors raised their investments.
In May South Korea’s President Yoon Suk Yeol characterized the international semiconductor space as “all-out warfare.” South Korea, for instance, announced $19 billion in funding for the nation’s semiconductor businesses with an emphasis on chip design and contract manufacturing, while Belgium’s nanoelectronics R&D hub imec announced that research labs in Europe will receive 2.5 billion euros ($2.72 billion) in funding under the European Chips Act, announced in 2023. And the U.S. — which poses the biggest threat to China’s position in the semiconductor market — is seeking proposals from eligible applicants for the development, validation and use of digital twins for semiconductor manufacturing, advanced packaging, assembly and test processes.
