China raising $30 billion for Big Fund's second phase

November 22, 2017 //By Peter Clarke
China raising $30 billion for Big Fund's second phase
The Chinese government is raising between RMB150 billion and RMB200 billion (between $23 billion and $30 billion) to pay for the second phase of its National IC Investment Fund, according to Taiwan-based TrendForce Corp.

The National IC Investment Fund – or Big Fund – was introduced in 2014 to support for the semiconductor sector and since 2015 China's semiconductor industry has been thriving. Chinese chip companies are expected to have an aggregate annual revenue of RMB620 billion (about $94 billion) in 2018, according to TrendForce.

However much of that early support was for manufacturing companies and initiatives.

By September 2017, the first phase of the "Big Fund" had raised RMB138.72 billion (about $21 billion) and spent the money on investment in 55 projects, reports TrendForce. The promised funding is RMB100.3 billion and the actual investment is RMB65.3 billion, of which IC manufacturing accounts for 65 percent.

The Big Fund has been used to support Tsinghua Unigroup's acquisition of Spreadtrum and RDA Microelectronics; the acquisition of STATS ChipPAC by Jiangsu Changjiang Electronics Technology Co., Ltd (JCET) and the launch of a joint venture between Tongfu Microelectronics Co. Ltd(TFME) and AMD's high-volume assembly, test and packaging facilities.

Going forward the Big Fund will focus on three sectors; memory; compound semiconductors including silicon carbide and gallium nitride, and IC design applied to IoT, 5G, artificial intelligence and smart vehicles. TrendForce forecast estimates that the proportion in IC design will increase to 20 to 25 percent and the investment projects will also be extended to include startups.

The spending by central and local government clearly drives additional local investment, TrendForce said. By June 2017, local semiconductor industry investment funds had reached a volume of RMB514.5 billion (about $78 billion), of which the largest one was RMB50 billion (about $7.5 billion).

In addition, driven by local governments' active involvement in semiconductor industry, some cities will become more significant. TrendForce expects Hefei, Xiamen and Jinjiang to emerge as major industrial regions of China's next-generation semiconductor industry.

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