China to Spend $40 Billion on Computer Chips to Counter US Trade Ban

Despite the United States’ ongoing efforts to curtail China’s chip production, the impact may be limited.

China is preparing to launch a new fund in a bid to strengthen its semiconductor industry, according to a report by Reuters. This state-sponsored initiative marks the third endeavor by the China Integrated Circuit Industry Investment Fund and aims to raise an impressive 300 billion yuan ($41 billion) in capital. In prior instances, the fund generated 138.7 billion yuan ($19 billion) in 2014 and 200 billion yuan ($27 billion) in 2019.

Approximately 60 billion yuan ($8 billion) is expected to originate from China’s finance ministry. While the identities of other contributing parties remain undisclosed, past supporters have included entities like China Telecom and China National Tobacco Corporation. Notably, a significant portion of the fund will be earmarked for the development of tools and resources pertinent to chip manufacturing.

Only a few days have passed since Huawei, a prominent Chinese electronics company, revealed its latest smartphone, the Mate 60 Pro, featuring domestically developed chips. In collaboration with chip manufacturer Semiconductor Manufacturing International Corp (SMIC), Huawei introduced a fresh Kirin 9000s chip.

Notably, SMIC’s advanced 7nm technology appears to endow the Mate 60 Pro with download speeds surpassing those commonly encountered in standard 5G smartphones.

This Mate 60 Pro announcement, coupled with the subsequent validation of its capabilities, stands in stark contrast to the combined efforts of the United States, Japan, and the Netherlands to curb China’s chip access and curtail its manufacturing prowess.

In August, President Biden signed an executive order further constricting investments in Chinese firms engaged with technologies like semiconductors. Past restrictions have notably targeted Huawei, including a ban enacted in January on licenses for exporting US technology to the Chinese corporation.