Recently, China’s National Integrated Circuit Industry Investment Fund Phase II (referred to as the ““Big Fund” Phase II”) has made frequent investment, successively acquiring stakes in the wafer manufacturing company Chongqing Xinlian Microelectronics Co., Ltd. (referred to as “XLMEC”) and the new silicon wafer enterprise Taiyuan Jinke Silicon Material Technology Co., Ltd. (referred to as “Jinke Silicon Material”).

“Big Fund” Phase II give priority to investing in semiconductor equipment and materials industries, with an emphasis on the upstream industrial chain covering film equipment, testing equipment, as well as materials like photoresists and masks.

According to statistics from Wechat Account Global Semiconductor, the “Big Fund” Phase II has initiated several investment over the past half year, involving companies such as IC design company Joywell Semi, EDA tool development startup Amedac, semiconductor equipment company SMIF, ceramic material developer Genori, EDA tool company Nine Cube, IP supplier KNL, JCET Auto Electronics (Shanghai) and CMOS millimeter-wave radar SoC chip company Calterah.

• “Big Fund” Phase II Invested Fab XLMEC with CNY 2.1 Billion

Recently, according to the latest information from QCC, Chongqing XLMEC has undergone several industrial and commercial changes. Notably, “Big Fund” Phase II has been added as a new shareholder, with a committed investment amounting to CNY 2.155 billion, representing a stake of 24.77% in XLMEC.

XLMEC’s business scope includes integrated circuit design, integrated circuit manufacturing, integrated circuit chip and product manufacturing, integrated circuit chip design and services, and semiconductor device-specific equipment manufacturing.

The company is positioned as a leading specialty process wafer fabrication plant in the western region of China, with the goal of becoming an advanced automotive-grade chip manufacturing company. As a fully state-owned company, it undertakes a project of building a 12-inch advanced specialty integrated circuit process line.

The first phase of the project plans for a capacity of 20,000 wafers, dedicated to becoming a significant strategic backup for the national integrated circuit industry in the west of China, ensuring the security of the integrated circuit supply chain.

Located in the Xiyong Microelectronics Industrial Park in Chongqing, XLMEC is counted as a focal project jointly developed by the Chongqing and High-tech Zone governments as part of the “33618” modern manufacturing cluster system and a key project for the transformation and upgrading of Chongqing’s high-end manufacturing and integrated circuit industries.

As a major project initiated by the Chongqing Municipal Government, it has a total investment exceeding several billion yuan, focusing on the R&D and production of 55-28nm technology nodes, with a planned total capacity of 40,000 wafers per month, of which the first phase capacity is 20,000 wafers per month.

• “Big Fund” Phase II Jointly Established a Silicon Material Company in Taiyuan Shanxi

As per Tianyancha, Jinke Silicon Material was established on July 15 with a registered capital of CNY 5.5 billion. It is jointly held by “Big Fund” Phase II, Taiyuan Jinke Semiconductor Technology Co., Ltd. (referred to as “Taiyuan Jinke Semiconductor”), and Taiyuan Fenshui Capital Management Co., Ltd, with a business scope including the manufacturing of semiconductor discrete devices, electronic special materials, other electronic devices, and integrated circuits.

In terms of equity structure, “Big Fund” Phase II holds 27.27%, Taiyuan Jinke Semiconductor 50.91%, and Taiyuan Fenshui Capital Management 21.82%. It is understood that Taiyuan Jinke Semiconductor is a wholly-owned subsidiary of Shanghai ZINGSEMI, which is itself wholly owned by National Silicon Industry Group (NSIG).

On June 11, NSIG announced its plan to invest in the capacity upgrade project for 300mm silicon wafers used in integrated circuits, with a total expected investment of about CNY 13.2 billion. It is learned that this investment will be implemented in two parts: the Taiyuan project and the Shanghai project, with the former expected to involve a total investment of about CNY 9.1 billion.

The implementing entity for the Taiyuan project is Jinke Silicon Material, which was co-founded by three parties: ZINGSEMI or its subsidiary (intended investment of CNY 2.8 billion), the “Big Fund” Phase II (intended investment of CNY 1.5 billion), and Taiyuan Fenshui Capital Management or its subsidiary (intended investment of CNY 1.2 billion), with a total joint investment of CNY 5.5 billion.

Upon its establishment, Jinke Silicon Material will primarily engage in the 300mm semiconductor silicon wafer business, implementing the capacity upgrade Taiyuan project for 300mm silicon wafers used in integrated circuits.

This project is scheduled to achieve a total capacity of 600,000 wafers per month for crystal pulling (including heavily doped wafers) and 200,000 wafers per month for slicing, grinding, and polishing (including heavily doped wafers). It will also promote the continuous upgrade and iteration of 300mm silicon wafer technology to meet the process requirements of various technical nodes in Chinese market.

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• [News] China’s Big Fund Phase Three Commences, Injecting 344 Billion RMB into Semiconductor Industry Growth
• [News] Big Fund II Infuses HLMC with an Additional USD 1 Billion, Potentially Eyeing on More Advanced Processes

(Photo credit: XLMEC)

China is reportedly in the process of establishing its third-phase of its big fund, with plans to inject USD 27 billion in funding aimed at supporting top-tier technology development, as per Bloomberg’s report. The goal is said to be enhancing China’s semiconductor self-sufficiency and overcoming export restriction measures imposed by the United States.

According to Bloomberg, the funding for the third phase of Big Fund primarily originates from local governments, state-owned enterprises, and their investment branches, with relatively smaller contributions from the central government. This aligns with China’s strategic focus on concentrating resources to support the development of key technologies.

The initial round of financing for the third phase of Big Fund aims to raise USD 27 billion, which, in the context of China’s semiconductor industry standards, is a relatively modest amount. The fund will directly support local companies and finance three to four sub-funds, diversifying transaction sources and investment strategies.

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.

As early as September of 2023, the second phase of the Big Fund initiated a round of financing, raising USD 41 billion to support local fab equipment manufacturers. As for the third phase of the Big Fund, this USD 27 billion will be allocated to critical projects across various regions in China.

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• [News] US Government Considers Adding ChangXin Memory Technologies to Entity List, Imposing Further Sanctions on Chinese Firms
• [News] Big Fund II Infuses HLMC with an Additional USD 1 Billion, Potentially Eyeing on More Advanced Processes

(Photo credit: iStock)

The investment momentum of China’s Big Fund Phase II shows no signs of slowing down, with its latest investment directed at Shanghai Huali Microelectronics Co., Ltd. (HLMC), a subsidiary of Huahong Group.

According to Sina Finance’s report, this substantial investment of up to USD 1 billion will support HLMC in continuous development of advanced process technologies and enhancing its manufacturing capabilities.

Given industry reports from as early as 2020 suggesting HLMC has progressed to the 14nm process, this investment from the Big Fund II signifies China’s commitment to even more advanced processes below 10nm in pursuit of semiconductor self-sufficiency.

Recently, Huahong Corporation announced that, to accelerate the research and development as well as mass production of the 40nm featured IC process on the 12-inch wafer production line in Wuxi, Jiangsu Province, jointly established by its wholly-owned subsidiary Huahong Hongli and other joint venture partners, Huahong Hongli signed a “Technology Development Agreement” with HLMC on December 1, 2023.

The agreement stipulates that HLMC will provide Huahong Hongli with 40nm logic fundamentals and related process technology, along with corresponding technical services, consultation, and support.

In contrast to Semiconductor Manufacturing International Corp. (SMIC), historically positioned as China’s leading foundry to compete with TSMC, HLMC has maintained a more discreet profile.

Officially capable of manufacturing chips on 22nm- and 28nm-class fabrication technologies, rumors circulated in the market as early as 2020 that HLMC could produce chips on a 14nm FinFET process nodes using deep ultraviolet (DUV).

Moreover, leveraging DUV multi-patterning methods could potentially drive production for advanced processes below 10nm, contributing to China’s pursuit of semiconductor self-sufficiency.

HLMC increased its registered capital from approximately CNY 22 billion to around CNY 28.4 billion, with Big Fund Phase II holding a stake exceeding 10%. This data indicates Big Fund Phase II’s confidence in HLMC’s development, providing substantial financial support to bolster its progress in semiconductor processes.

The investment direction of Big Fund Phase II differs from that of Big Fund Phase I, which primarily focusing on key industries such as chip manufacturing. It is more diversified, spanning multiple areas, including wafer manufacturing, integrated circuit design tools, chip design, packaging testing, equipment, components, materials, and applications.

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• [News] Big Fund II Targets Computing Power, Invests in Tsing Micro Technology
• [News] China’s Big Fund Drive Changxin Xinqiao towards 3-Year Memory Chip Mass Production

(Photo credit: Hua Hong Group)

According to ChinaTimes’ report, Big Fund II is once again making strategic moves, this time targeting a stake in Tsing Micro Technology, a company specializing in reconfigurable computing chips.

Reconfigurable architecture chips possess extensive general computing capabilities, making them essential for addressing high computing power demands. Big Fund II’s investment is a proactive step to position itself in the upcoming computing power market, avoiding potential “bottleneck” crises.

Amidst the pressure of technology restrictions from the United States, Big Fund II, tasked with supporting the development of domestic semiconductor companies in China, has been active in recent investment initiatives.

At the end of October this year, Big Fund II invested CNY 14.5 billion, participating in the capital increase of the memory production project at ChangXin XinQiao.

ChinaFund News reports that Tsing Micro Technology’s main business focuses on innovative research and development, as well as industrial applications of reconfigurable computing chips.

Tsing Micro Technology recently underwent a business change, with the addition of ten institutional shareholders, including National Integrated Circuit Industry Investment Fund Phase II (Big Fund II), GigaDevice, CMB International, and Beijing Zhongguancun Science City Technology Growth Investment Partnership, among others. The registered capital of the company increased from approximately CNY 33.18 million to around CNY 38.9 million, with Big Fund II holding a 5.8824% stake.

The report highlights that Tsing Micro Technology’s technical team originates from the reconfigurable computing team at Beijing Tsinghua University’s Institute of Microelectronics. The team has been selected for three consecutive years (since 2021) in EETimes’s “Silicon 100: Startups Worth Watching” list.

Tsing Micro Technology’s Co-founder and CTO, Peng Ouyang, stated in November 2022 that faced with the explosive growth in the demand for computing power due to artificial intelligence, mainstream GPU chips require significant investment and cannot meet the “computing power black hole” brought about by the development of large models. He emphasized that reconfigurable computing chips are a solution to this challenge.

Since 2019, Tsing Micro Technology has undergone multiple rounds of financing. In January 2019, angel investors included Baidu and Focus Media. Subsequent Series A funding involved investments from SK Hynix in South Korea, Green Pine Capital Partners, and SenseTime, among others. Series B financing was led by CDB RW Funds, with participation from SenseTime and Legend Capital.

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• [News] China’s Big Fund Drive Changxin Xinqiao towards 3-Year Memory Chip Mass Production
• [News] With two October Investments, Big Fund Phase II Commits Nearly 19 Billion RMB

(Photo credit: Tsing Micro Tech)

Since October, China’s National Integrated Circuit Industry Investment Fund Phase II (hereafter referred to as “Big Fund Phase II”) has made two significant investments.

First, it invested in JCET Group’s subsidiary, JCET Group Automotive Electronics (Shanghai) Co., Ltd. (hereafter referred to as “JCET Automotive Electronics”). Later, it invested in ChangXin Xinqiao Storage Technology Co., Ltd. (hereafter referred to as “ChangXin Xinqiao”).

Data reveals that since its establishment, Big Fund II has invested in nearly 40 companies, with a total investment exceeding ¥55 billion. Despite the semiconductor industry’s low point this year, Big Fund Phase II has remained active, particularly emphasizing “strengthening the supply chain.” This includes increasing investments in critical areas like semiconductor equipment and materials.

1. Investing in ChangXin Xinqiao, Enhancing Storage Manufacturing

On October 26th, Big Fund II invested ¥14.5 billion to acquire a 33.14% stake in ChangXin Xinqiao.

According to industry sources, Changxin Xinqiao is one of the projects developed as part of the ChangXin Memory Technologies (CXMT), a collaboration between Hefei Municipal Government, CXMT, Overseas Chinese Town Holdings Company, and NAURA Technology Group Co. in 2019.

As per previous public announcements, the total investment in the CXMT Semiconductor Manufacturing Base exceeds 220 billion yuan. The project is situated in the Hefei Airport Economic Demonstration Zone and primarily focuses on the Changxin Memory project, involving the development of the entire upstream and downstream industrial chain.

Among these initiatives, the Changxin 12-inch storage memory wafer manufacturing base stands out with a total investment of 150 billion yuan, making it the largest single industrial project investment in Anhui Province.

Additionally, according to information on Changxin Memory’s official website, their core product is DDR4 memory chips, which belong to the fourth generation of double data rate synchronous dynamic random-access memory (SDRAM).

2. Increasing Investment in JCET Group’s Subsidiary: Automotive Electronics Focus

On October 27th, JCET Group’s subsidiary, JCET Group Automotive Electronics, received a total capital injection of 4.4 billion yuan from a combination of new and existing shareholders, further emphasizing its commitment to the development of in-vehicle technology. This infusion of capital will accelerate the construction of its first-phase project for manufacturing and testing automotive chips.

After this capital injection, the subsidiary’s registered capital increased from ¥400 million to ¥4.8 billion, remaining a subsidiary of JCET Group. JCET Group Management’s ownership will be diluted to 55%, while Big Fund Phase II will hold an 18% stake.

JCET Group stated that this capital injection is primarily intended for the construction and operation of the target company, aligning with the company’s strategic plans and business development requirements.It aims to better serve the continuously growing market and customer demands, especially in strengthening the company’s automotive electronics business.

Currently, the company’s financial health is robust, and it believes that this capital infusion will not significantly impact its liquidity.

3. Big Fund Phase II Focuses on “Strengthening and Supplementing the Supply Chain” and Plays a Significant Role in the Down Cycle

The semiconductor industry has experienced significant performance fluctuations due to the ongoing semiconductor down cycle. In response to these challenges, Big Fund Phase II has become more active.

The fund has appeared on the shareholder lists of multiple semiconductor companies striving for initial public offerings (IPOs), including Hua Hong Semiconductor Limited, RYCHIP Semiconductor Inc., Guanggang Gases & Energy Company Limited, and Sinophorus Electronic Materials Co..

Notably, Big Fund Phase II has shown continued interest in Hua Hong Semiconductor Limited.

Hua Hong Semiconductor 

Silan Microelectronics Co.

Silan Microelectronics Co. has also attracted significant attention from Big Fund Phase II. On August 28th, Silan Microelectronics announced its intention to jointly invest 1.2 billion RMB with affiliated company Big Fund Phase II and non-affiliated entity HaiChuang Development Fund to subscribe for newly increased registered capital of 1.19 billion RMB in the affiliated joint-stock company, Xiamen Silan Advanced Compound Semiconductor Co., Ltd.. Silan Microelectronics is set to acquire controlling interest in Xiamen Silan Advanced Compound Semiconductor, while Big Fund Phase II will hold a 14.11% stake.

Publicly available information indicates that Xiamen Silan Advanced Compound Semiconductor revolves around the manufacture of compound semiconductor chips. In July of the previous year, the company initiated the “SiC Power Device Production Line Construction Project.”

This project entails an investment plan of 1.5 billion RMB to construct a 6-inch SiC power device chip production line. Ultimately, it aims to achieve an annual production capacity of 144,000 pieces of 6-inch SiC power device chips, comprising 120,000 pieces/year of SiC-MOSFET chips and 24,000 pieces/year of SiC-SBD chips.

China Resources Microelectronics Limited

On August 15, it was announced that the company’s subsidiary, Runpeng Semiconductor, plans to increase capital and introduce external investors, including Big Fund Phase II. Following the completion of this transaction, Runpeng Semiconductor’s registered capital will increase from 2.4 billion RMB to 15 billion RMB.

The announcement indicates that the external investors that Runpeng Semiconductor intends to introduce include 12 institutions, including Big Fund Phase II. Big Fund Phase II is committed to subscribing to a registered capital of 3.75 billion RMB.

In addition, the upstream semiconductor materials sector has also attracted the attention of Big Fund Phase II. In late March of this year, Jingrui announced that its subsidiary, Hubei Jingrui, plans to introduce strategic investors through capital expansion. Big Fund Phase II, among others, is set to inject 160 million yuan in cash into Hubei Jingrui.

Summary

Overall, Big Fund Phase II’s investments span the entire integrated circuit industry chain. However, it’s worth noting that compared to Big Fund Phase I, Big Fund Phase II places more emphasis on strengthening and supplementing the supply chain.

It has increased investments in critical areas such as upstream semiconductor equipment, materials, and shows optimism towards emerging hot sectors like AI and automotive electronics.

(Photo credit: Pixabay)