China Reportedly to Launch Big Fund Phase Three, Focusing on Equipment, Materials, and EDA Development

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According to a report by Reuters on September 5, 2023, in a bid to bolster its domestic semiconductor industry and achieve semiconductor self-reliance, the Chinese government is planning to launch the third phase of the “Big Fund,” with a capital infusion of approximately 300 billion Chinese Yuan (about 41 billion US Dollars).

TrendForce Insights:

• The Big Fund’s Expanding Scope and Potentially Aggressive Third Phase Investment

The National Integrated Circuit Industry Investment Fund, commonly referred to as the “Big Fund,” originated from the Chinese State Council’s “Outline for the Promotion of National Integrated Circuit Industry Development” issued in June 2014. Its ultimate goal is to bring China’s semiconductor industry up to international standards by 2030 and nurture a group of companies to become international Tier 1 suppliers.

In September 2014, the National Integrated Circuit Industry Investment Fund was officially established, raising a total of 138.7 billion Chinese Yuan, with a primary focus on semiconductor manufacturing and secondary emphasis on design and testing. After five years, the second phase of the fund was organized in October 2019, with its scale expanding to 204.1 billion Chinese Yuan, with a further focus on equipment and materials.

Now, just four years after the second phase, there are reports of China planning to launch the third phase, with a fundraising target increased to 300 billion Chinese Yuan. This indicates that China, faced with semiconductor technology restrictions led by the United States, is increasing its efforts to support the semiconductor industry. The investment strategy for the third phase may be even more aggressive compared to the previous two phases.

• Equipment, Materials, and EDA Remain Key Areas of Investment in the Third Phase

The second phase of the Big Fund exhibited a greater emphasis on the upstream segments of the semiconductor industry, allowing for comprehensive coverage of China’s domestic semiconductor supply chain. However, due to the high technical barriers in semiconductor manufacturing equipment, materials, EDA, and other upstream areas, which are still dominated by a few manufacturers in the global supply chain, short-term investments may not yield immediate results for China’s domestic supply chain.

Additionally, in the face of external technology restrictions, it has become more challenging for China’s semiconductor upstream supply chain to achieve technological breakthroughs through mergers, acquisitions, or attracting foreign talent. Consequently, it is expected that the third phase of the Big Fund will expand its support for Chinese domestic semiconductor manufacturing equipment, materials, and EDA software providers, with a particular focus on key players such as NAURA, AMEC, SMEE, NSIC, Kempur, Jingrui, Empyrean, among others.