China allocated $47 billion for import substitution in the semiconductor industry

China has begun distributing funds from the third phase of its Big Fund III, intended to develop the domestic semiconductor industry. This investment package of 344 billion yuan (about $47 billion) is allocated to support microchip manufacturers in the face of limited access to advanced technologies from market leaders ASML and Applied Materials.

It is noted that the amount of $12.685 billion is significant, but it may not be enough to catch up with the market leaders in the production of equipment for chip production. By comparison, ASML’s annual research and development budget was $4.308 billion in 2023, and Applied Materials’ annual R&D budget was $3.233 billion in 2024.

It is worth saying that since its launch in 2014, the Big Fund and its successor, the Big Fund II, have raised hundreds of billions of dollars. Investments of the first stage (2014-2018) amounted to about $100 billion, and the second (2019-2023) – $41 billion. According to Bloomberg estimates, as of mid-2024, the assets under management of the fund amounted to about $45 billion.

US sanctions have severely impacted a number of successful Chinese companies in the semiconductor industry, including HiSilicon (Huawei’s chip design subsidiary), contract chip manufacturer SMIC, and 3D NAND memory leader Yangtze Memory Technologies (YMTC). Nevertheless, as experts note, China continues to actively develop the ecosystem and increase investments, trying to overcome restrictions and strengthen its position in the global market.