Commentary: China’s ‘Big Fund III’ Has Record Capital but Faces Larger Hurdles

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China has recently launched the third phase of the National Integrated Circuit Industry Investment Fund, also known as the “Big Fund,” with investments from 19 state-owned investors led by the Ministry of Finance.

The establishment of the new phase has made headlines as the Big Fund is considered a key part of Beijing’s strategy to develop its own semiconductor industry to counter Washington’s escalating export controls against Chinese tech companies such as Huawei Technologies Co. Ltd.

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China launched the third phase of its National Integrated Circuit Industry Investment Fund, with 344 billion yuan ($47.5 billion), led by the Ministry of Finance.
The third phase has fewer local state investors and a different shareholding structure, focusing on centralized planning.
The fund faces challenges like investors seeking returns while chip manufacturers struggle to profit, and the need to build a domestic advanced technology ecosystem amidst U.S. export controls.

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Who’s Who

Huawei Technologies Co. Ltd.: Huawei Technologies Co. Ltd. is a Chinese tech company mentioned in the article as being one of the targets of Washington’s escalating export controls. These restrictions are part of the broader context in which China is bolstering its semiconductor industry through the third phase of the National Integrated Circuit Industry Investment Fund, also known as the "Big Fund."

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What Happened When

2014：: The initial phase of the National Integrated Circuit Industry Investment Fund (Big Fund) was set up with 138.7 billion yuan.

2019：: The second phase of the National Integrated Circuit Industry Investment Fund (Big Fund) was established, raising 204.2 billion yuan.

May 23, 2024：: South Korea announced its plan to invest $19 billion in its semiconductor industry.

As of May 29, 2024：: China launched the third phase of the National Integrated Circuit Industry Investment Fund (Big Fund) with a registered capital of 344 billion yuan.

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