Chinas Memory Chip Industry Heats Up with $2 Billion State Fund Investment

Chinas Memory Chip Industry Heats Up with $2 Billion State Fund Investment

China’s state-backed chip investment fund has made a significant investment of 14.56 billion yuan (equivalent to $1.99 billion) in Changxin Xinqiao, a memory chip company. The investment by the China Integrated Circuit Industry Investment Fund, often referred to as the “Big Fund,” accounts for 33.15% of Changxin Xinqiao’s total registered capital, as indicated in an update on the company’s registration information available through the National Enterprise Credit Information Publicity System (NECIPS) dated October 26.

Changxin Xinqiao, founded in 2021 in Hefei city, Anhui province, is led by General Manager Zhao Lun, who also holds the same position in ChangXin Memory Technologies, a prominent memory chip company in China.

Changxin Xinqiao has plans to establish a manufacturing base for 12-inch memory wafers, with a specific focus on integrated dynamic random access memory (DRAM) design and production. This initiative is set to become the first of its kind in China to reach mass production status, according to a statement issued by a project contractor in June of the previous year.

Both Changxin Xinqiao and the Big Fund have not provided immediate responses to Reuters’ requests for comment regarding this substantial investment.

The Big Fund’s recent investment follows its injection of 13 billion yuan into Yangtze Memory Technologies (YMTC) earlier in the year, marking one of its most substantial investments in recent times. YMTC is a key player in the global NAND memory market in China, with aggressive plans to expand production capacity and research and development, supported by state subsidies. It’s worth noting that YMTC was placed on the U.S. blacklist in 2022 due to concerns about technology diversion to Huawei Technologies.

Changxin Xinqiao’s capital expansion, funded in part by the Big Fund, is part of a broader effort involving existing investors Changxin Xinan and Hefei Xinyi, which increased their capital contributions by 10.4 billion yuan and 14 billion yuan, respectively. Hefei Xinyi is associated with investment platforms linked to the state asset regulator in Anhui province.

China initiated the Big Fund in 2014 as a means to accelerate the growth of its semiconductor industry, with the goal of catching up to the United States, Taiwan, and South Korea. It raised 138.7 billion yuan for its first fund and 204 billion yuan for its second fund. Recent reports indicate that the Big Fund aims to raise approximately $40 billion in a subsequent round, reflecting China’s increased efforts to narrow the technology gap. It’s important to note that the Big Fund has faced challenges, including a corruption scandal that resulted in an investigation into its former head last year. (1 USD = 7.3162 Chinese yuan

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Ahmed Hassan

Ahmed Hassan, a distinguished Ph.D. holder in Political Science from Stanford University, is your go-to expert for in-depth political analysis. His well-researched articles provide valuable insights into the complex world of politics. Ahmed's commitment to balanced reporting and informed commentary ensures you're always up-to-date with the latest developments in the political landscape.

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