China Establishes $5 Billion Integrated Circuit Fund

Chinese Government Establishes $5 Billion National Integrated Circuit Investment Fund

A new national integrated circuit investment fund, named "Big Fund Phase 3," has been established in Beijing's economic-technological development zone, according to China's National Enterprise Credit Information System. With a registered capital of 34.4 billion yuan (approximately $5 billion), the fund's activities will primarily focus on private equity investment and asset management in the integrated circuit sector. The Big Fund Phase 3 is jointly held by 19 shareholders, including the Ministry of Finance, China Development Bank, Shanghai Guosheng Group, and five major Chinese banks. The Ministry of Finance holds around 17.44% of the shares, China Development Bank holds approximately 10.47%, and Shanghai Guosheng Group holds about 8.72%. The four major state-owned banks—Agricultural Bank of China, Bank of China, China Construction Bank, and Industrial and Commercial Bank of China—each hold around 6.25%. The remaining shareholders hold less than 5% of the shares. For continuous updates on company stocks, personnel changes, and other investment information, consider subscribing to the China Finance Database.

Key Takeaways

• National Integrated Circuit Industry Investment Fund Three Phase (hereafter "large fund three phase") has been established with a registered capital of 34.4 billion yuan.
• The large fund three phase is mainly engaged in equity investment and asset management related to integrated circuits.
• The large fund three phase is jointly held by 19 shareholders, including the Ministry of Finance, China Development Bank, Shanghai Shengrui Group, etc.
• The Ministry of Finance holds approximately 17.44% of the shares, China Development Bank holds approximately 10.47%, and Shanghai Shengrui Group holds approximately 8.72%.
• China Construction Bank, Agricultural Bank of China, Bank of China, and Industrial and Commercial Bank of China each hold approximately 6.25% of the shares.

Analysis

The establishment of the "Big Fund Phase 3" reflects China's continued commitment to developing its integrated circuit sector. This state-backed fund, with a $5 billion war chest, will bolster private equity investment and asset management in this critical technology area. The Ministry of Finance, China Development Bank, and major Chinese banks are key shareholders, signaling strong governmental and financial support. This initiative is a step towards technological self-sufficiency and reducing reliance on foreign technology, in line with China's strategic goals.

Consequences: This fund's creation is likely to lead to increased investment in China's integrated circuit industry, potentially catalyzing growth and innovation. It might also contribute to reduced reliance on foreign technology, with possible geopolitical implications.

Causes: The Chinese government's strategic aim of technological self-sufficiency and decreasing dependence on foreign technology is the driving force behind the establishment of this fund. It serves as a proactive measure to nurture domestic innovation and mitigate vulnerabilities in the supply chain.

Impacts: This development may influence international integrated circuit manufacturers as China enhances domestic production. It could also result in shifts in the market dynamics for countries and organizations dependent on Chinese demand for their integrated circuit products.

Did You Know?

• Integrated Circuit Industry Investment Fund Three Phase (Big Fund Phase 3): This is a newly established national investment fund in China, with a registered capital of 34.4 billion yuan (approximately $5 billion). The primary focus of this fund is to make private equity investments and manage assets in the integrated circuit sector, which is a critical part of the technology industry, involving the design and manufacturing of electronic circuits on one single chip.
• Equity Investment and Asset Management in Integrated Circuits: Big Fund Phase 3 is mainly engaged in equity investment and asset management related to integrated circuits. Equity investment refers to the fund's participation in the ownership of integrated circuit companies by acquiring shares or stocks. Asset management involves overseeing and controlling the fund's investments in integrated circuits to maximize the return on investments.
• Key Shareholders: The Big Fund Phase 3 is jointly held by 19 shareholders, including the Ministry of Finance, China Development Bank, Shanghai Guosheng Group, and the four major state-owned banks (Agricultural Bank of China, Bank of China, China Construction Bank, and Industrial and Commercial Bank of China). The Ministry of Finance holds around 17.44% of the shares, China Development Bank holds approximately 10.47%, Shanghai Guosheng Group holds about 8.72%, and each of the four major state-owned banks holds around 6.25% of the shares. These key shareholders collectively represent the Chinese government's strong commitment to developing the integrated circuit industry.