Guangdong to set up second phase of fund for semiconductor sector
Published: Apr 19, 2023 12:00 AM
Production of semiconductor chip File photo: VCG

Production of semiconductor chip File photo: VCG

Aiming to foster a hub for China's integrated circuit (IC) industry, South China's Guangdong Province is preparing to set up the second phase of a semiconductor fund with a scale of 30 billion yuan ($4.36b), media reports said on Tuesday.

It will also set up specialized sub-funds to invest in small and medium-sized projects, in areas including automotive chips and compound semiconductors, said Jin Shenghong, head of Guangdong-based Yuecai Holdings, at the 25th China IC Manufacturing Annual Conference, which was held from Monday to Wednesday. 

The term of the fund will be up to 17 years, leveraging the advantages of long-term capital to accompany enterprises growing through the ups and downs of the industry cycle and achieving sustainable development, domestic news outlet 21st Century Business Herald reported, citing Jin.

In recent years, Guangdong has stepped up efforts to boost the growth of its IC industry and shore up weak links in the industrial chain. Policies, technology, and capital are all indispensable factors behind the construction of core projects and new areas of the industrial chain, the report noted.

The province established the first phase of the Integrated Circuit Industry Fund in December 2020 with a scale of 20 billion yuan, mainly investing in key projects and innovative enterprises in Guangdong, Jin said.

The first phase has now expanded to 31 billion yuan, with the parent fund carrying out strategic investments and supporting key semiconductor enterprises in the province. 

Jin said the sub-funds have invested in 102 projects with a total investment amount of over 9 billion yuan, covering 45 chip design companies, 19 manufacturing and testing companies, and 38 equipment and materials companies. "Currently, two of the enterprises have successfully passed their IPO review, and 19 more companies will apply for an IPO in the next two years," Jin said.

There are about 40 major IC projects being developed in Guangdong, with a total investment of more than 500 billion yuan, Wang Xi, vice governor of the province, said at the same meeting. 

China has the largest semiconductor market in the world. Against the backdrop of the US "tech war" against China, the country and its companies have ramped up efforts to enhance self-reliance to cope with foreign technological blockades.

Chinese chip producers have seen substantial growth in the past two years, and the effect of both quantitative and qualitative change is emerging, Ma Jihua, a veteran industry analyst and a close follower of China's chip industry, told the Global Times.

Chinese companies have greatly promoted import substitution and also gained more market share across the world, analysts noted.