Following legislation and major investments from the US and EU to bolster their domestic chip manufacturing industries, and restrictions on the sale of high end chips and tools to China, comes the 100% expected Chinese response.
According to Reuters, the state-backed China Integrated Circuit Industry Investment Fund reported that it's raised funding to the tune of 344 billion yuan ($47.5 billion), which will be used to drive development and achieve self-sufficiency for China's domestic chipmaking industry.
The Chinese Ministry of Finance is the fund's biggest contributor with a 17% stake, while the China Development Bank Capital is the second-largest shareholder with a 10.5% stake. The rest of the fund is made up of seventeen other contributors, including five major Chinese banks.
This is actually the third phase of funding in what is locally known as the 'Big Fund'. The first round in 2014 raised $21.8 billion, while the second round raised $29.08 billion in 2019. The third phase has taken on additional urgency following an escalating series of sanctions and bans on the sale of chips and equipment to China. The US fears its best tech could be used in Chinese military applications.
These sanctions mean China needs to aggressively invest if it is to keep up with the US in particular, following the passage of the CHIPS act. CHIPS money is beginning to flow into the coffers of companies investing in domestic projects, including Samsung, Intel and TSMC.
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Reuters reports the third phase of Big Fund investment will focus on developing equipment used for chip manufacturing. China has already been blocked from purchasing Extreme Ultraviolet (EUV) tools from Dutch-based ASML, which means China is forced to develop its own equipment. That's not the kind of technology that can be developed overnight.
Chinese authorities will be hoping for some tangible progress. Despite China's economic rise, it has generally failed to match the Japanese, Korean and particularly the Taiwanese semiconductor industries. Taiwan's chipmaking prowess is no doubt an ongoing wound to the collective ego of the Chinese government.
I wouldn't expect to see competitive x86-derived clones anytime soon, but other chip architectures such as the open-source RISC-V are far less subject to foreign control. With millions of developers in its talent pool, who knows what the future might hold for Chinese chips.
Superpowers aren't really all that different from kids in a schoolyard, and these two kids don't like sharing, even if substituting a football for a semiconductor manufacturing industry is a tad more complicated.
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