In a bold move to accelerate its semiconductor ambitions, Beijing’s municipal government has unveiled a substantial $1.2 billion fund aimed at bolstering the local chip industry. The newly established Beijing Integrated Circuit Industry Investment Fund is part of China’s broader strategy to achieve self-sufficiency in semiconductor production, a critical sector in the ongoing technological race.

Launched with an authorized capital of 8.5 billion yuan, the fund is managed by the Beijing Zhongguancun Capital Fund Management, a subsidiary created specifically for this purpose by the Zhongguancun Development Group. This initiative underscores the growing momentum behind China’s regional efforts to cultivate a robust semiconductor ecosystem, with similar funds being established in other key cities.

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Beijing’s latest fund is one among several regional initiatives mirroring the scale and ambition of the China Integrated Circuit Industry Investment Fund, commonly referred to as the “Big Fund.” Earlier this year, the third phase of the Big Fund was launched with a staggering 344 billion yuan ($48.53 billion) in authorized capital, a sum that rivals the $53 billion allocated by the U.S. government to support its semiconductor industry in 2022.

These efforts reflect a nationwide push to reduce dependency on foreign technology and establish China as a global leader in semiconductor manufacturing. However, the rapid influx of state funding has also led to concerns about overcapacity in production. Despite these investments, China’s leading semiconductor foundry, SMIC, remains approximately five years behind industry leader TSMC in terms of technology, according to analysts at the American think tank ITIF.

As China ramps up its semiconductor strategy, the new Beijing fund highlights the fierce commitment of local governments to close the technology gap and secure the country’s place in the global semiconductor supply chain.

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