Approximately six months ago, China initiated the third edition of its significant investment fund, known as the Big Fund, aimed at boosting its domestic semiconductor industry towards self-reliance. The latest phase, Big Fund III, is specifically designed to bolster the development and manufacturing of chip production tools, a critical area where Chinese firms have faced hurdles due to losing access to sophisticated equipment from leading companies like ASML and Applied Materials. This initiative involves deploying a substantial ¥344 billion (about $47 billion), as reported by Nikkei.
The China Integrated Circuit Industry Investment Fund, or Big Fund III, kicked off on December 31, 2024. Managed by Huaxin Investment Management — established in 2014 to handle all stages of the fund — this phase starts with an investment of ¥93 billion ($12.685 billion) targeting companies involved in producing essential materials like ultra-pure chemistry or silicon wafers, and those developing wafer fabrication equipment. It remains to be seen whether the fund will enhance the capabilities of existing players such as AMEC and Naura or support the rise of innovative startups in the sector.
While $12.685 billion is a substantial sum, it still falls short compared to the R&D expenditures of the industry’s leaders. For perspective, ASML’s research and development budget was $4.308 billion in 2023, and Applied Materials allocated $3.233 billion for R&D in 2024.
Since its inception in 2014, the Big Fund and its successor, Big Fund II, have raised hundreds of billions of dollars. The first phase (2014–2018) saw investments close to $100 billion, and the second phase (2019–2023) invested about $41 billion. By mid-2024, Bloomberg estimated the assets managed by the fund were worth around $45 billion, although this was impacted by U.S. sanctions targeting the Chinese semiconductor sector. These sanctions have notably affected leading Chinese semiconductor entities, including Huawei’s chip design division HiSilicon, the contract chip manufacturer Semiconductor Manufacturing International Corporation (SMIC), and the 3D NAND technology frontrunner Yangtze Memory Technologies Co. (YMTC).
