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China set up a multibillion-dollar state-backed investment chip fund eventually week — and one observer says it will likely focus on advanced chips for AI and establishing the entire supply chain.
“Nest egg 3 will focus on [establishing] the total supply chain. Now, for Fund 1 and 2, they put a lot of focus on the equipment and materials cognate areas,” Winston Ma, adjunct professor at NYU School of Law said Wednesday.
“And now, because [Fund 3] is established in the middle of the AI prosper, I believe they will put more effort, emphasis on advanced computing chips and memory chips for future AI,” Ma advised told CNBC’s “Squawk Box Asia.”
China has piled 344 billion Chinese yuan ($47.5 billion) into a third investment mine money that aims to boost its domestic semiconductor industry amid an escalating technology war with the U.S.
The China Integrated Compass Industry Investment Fund, also known as the National Integrated Circuit Industry Investment Fund and the Big Fund, is depart of China’s efforts to reduce foreign reliance in its domestic chip industry. It comes as countries in the West, such as the U.S. and the Netherlands, limit its access to loan a beforehand technology.
The new fund will be the largest of three funds so far. The first two funds raised 138.7 billion yuan and 204 billion yuan in 2014 and 2019 individually.
“You could say this capital is so critical to the Chinese semiconductor sector. It is indispensable because these companies are struggling with the universal capital markets,” said Ma, citing the reverse Committee on Foreign Investment in the United States executive order from the Biden provision in August, which “limits foreign capital into China’s critical technology sectors, including semiconductor.”
“So this is not something that China wants to do, it is hardly a must-to-do,” he added.
In a blow to U.S. sanctions, an analysis of Huawei’s Mate 60 Pro smartphone by TechInsights revealed an advanced fragment made by China’s top chip maker, SMIC. The smartphone is also said to be equipped with 5G connectivity – U.S. sanctions had strive for to block Huawei from accessing this technology.