Beijing sets up $1.2 bn fund as China seeks to bolster chip industry

The Beijing municipal government has set up a USD 1.2 billion semiconductor investment fund amid an accelerating trade dispute with the US.

The state-owned Zhongguancun Development Group established the Beijing Integrated Circuit Industry Investment Fund with a registered capital of 8.5 billion yuan (USD 1.2 billion), according to information available on Chinese corporate database Qichacha, South China Morning Post reports.

The Zhongguancun firm was started in 2010, and the fund will reportedly be run by a subsidiary registered as Beijing Zhongguancun Capital Fund Management.

The new fund is among a series of measures local Chinese governments are taking to shore up the country’s semiconductor sector. 

These initiatives include the national-level China Integrated Circuit Industry Investment Fund or the so-called “Big Fund,” the country’s largest-ever semiconductor investment fund set up with a registered capital of 344 billion yuan (about 48 billion USD).

The Big Fund’s biggest investor is China’s Ministry of Finance, with a 17% stake and paid-in capital of 60 billion yuan. The China Development Bank Capital with a 10.5% stake is reportedly the second-biggest shareholder.  

The Shanghai government has also put in nearly USD 1 billion into its own chip fund. 

In another sign of the intensifying tech war between the US and China, Netherlands-based ASML may see further restrictions on its operations in the China market as the Dutch government is mulling not renewing crucial licenses, according to a recent Bloomberg report. 

ASML makes some of the world’s most advanced chipmaking equipment, and nearly half of its sales comes from China.

The US has been pressurizing allies like the Netherlands and Japan to prevent China from accessing advanced chipmaking tools, and align their export controls with US policies.