China Pumps Tens Of Billions Into Key Industry Amid Tech War With US

The Chinese Communist Party has launched a $47.5 billion state-backed investment fund to strategically boost the semiconductor industry in competition with the U.S., Reuters reported Monday.

The 344 billion yuan investment is the biggest of three funds that have been established, with the first being created in 2014, providing 138.7 billion yuan in capital, and the second in 2019, providing 204 billion yuan, according to Reuters. China is subsidizing its semiconductor industry in a bid to compete with the U.S. in the manufacturing of the technology, with chips showing good potential in both military and consumer aspects.

The newest investment by China will focus on boosting the country’s equipment for chip manufacturing, which the U.S. currently has the upper hand in, according to Reuters. Seventeen Chinese entities are listed as investors in what has been dubbed the “Big Fund,” with the top two being the country’s finance ministry and the China Development Bank Capital.

The Biden administration has also sought to subsidize the U.S.’ semiconductor industry and its development through the $280 billion Chips and Science Act signed in 2022, which authorized funds for both research and manufacturing. The U.S. currently has an advantage in the intellectual property of the chip industry, while China controls vast amounts of resources necessary for their assembly.

The Department of Commerce announced in April that it would be directing around $6.6 billion in direct funding and $5 billion in loans to the Taiwan Semiconductor Manufacturing Company. Biden also visited chip company Intel’s Arizona campus in March, where he unveiled $8.5 billion in direct funding and $11 billion in loans for facilities in the state for the company, even as the timeline for the projects continues to drag on.

The U.S. has also placed a number of restrictions to limit China’s access to American chip technology, including imposing restrictions in October 2022 that blacklisted multiple Chinese companies from working with American firms. In October 2023, the Biden administration increased restrictions, closing loopholes on current limitations to further hinder what equipment can be imported by China that could help the country make more advanced semiconductor chips.