Beijing has officially mobilized its largest state-backed semiconductor fund to date. With $47.5 billion in fresh capital, 'Big Fund III' aims to break US chokeholds on chip equipment and manufacturing.
BEIJING - In a decisive move to secure technological sovereignty, China has officially mobilized the third phase of its National Integrated Circuit Industry Investment Fund, commonly known as "Big Fund III." With a registered capital of 344 billion yuan ($47.5 billion), this latest vehicle represents Beijing's largest single state-backed effort to date to inoculate its semiconductor sector against tightening United States export controls. The fund's establishment marks a significant escalation in the global chip war, signaling a shift from mere manufacturing expansion to a targeted effort to master the entire supply chain ecosystem.
The launch comes at a critical juncture. As Washington continues to restrict China's access to advanced artificial intelligence chips and chip-making equipment, the Chinese government is doubling down on state capitalism. According to corporate filings released in late May 2024 and updated operational reports from early 2025, the fund has already begun deploying capital, specifically targeting the "neck" links-industry choke points where Chinese reliance on foreign technology is most acute.
This massive capital injection is not merely an economic policy; it is a geopolitical maneuver intended to challenge the dominance of global leaders like TSMC, NVIDIA, and ASML by building an independent, sanctions-proof industrial base.
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The data surrounding the new fund highlights the sheer scale of China's ambition. According to filings with the government-run companies registry, the fund was officially established on May 24, 2024.
"China is pumping another 344 billion yuan into a state-backed semiconductor industry investment fund to drive its chip industry development amid an escalating technology race with the United States." - Caixin Global
Unlike its predecessors, which focused heavily on semiconductor manufacturing fabrication plants (fabs), Phase III appears to have a more surgical focus. Reports from TrendForce and Nikkei Asia suggest the capital is being directed toward the semiconductor ecosystem-specifically materials, parts, and equipment.
This strategy addresses the "neck" links in the supply chain-technologies that are currently monopolized by Western firms. By late 2024, corporate registry data revealed the establishment of Guotou Jixin, a subsidiary with a capital base of 71 billion yuan, 99.9% funded by Big Fund III. In September 2025, data indicated this entity had already invested RMB 450 million specifically into semiconductor equipment sectors.
The establishment of this third fund brings China's total central government investment in the sector to historic levels. Since 2014, the state has poured approximately $145.5 billion (686.7 billion yuan) into the industry across three phases. This sustained financial commitment underscores Beijing's view that semiconductor capability is a matter of national security, not just industrial policy.
The activation of Big Fund III creates a complex ripple effect across the global technology landscape.
Experts argue that this massive subsidy program will accelerate the decoupling of US and Chinese technology stacks. As China builds its own lithography and etching tools, global companies may eventually face a market where they must choose between incompatible supply chains.
While China is years behind in cutting-edge logic chips (below 5nm), massive subsidies in legacy chips (28nm and above) could flood the global market, driving down prices and pressuring competitors in Taiwan, South Korea, and the West. The sheer volume of capital ensures that Chinese firms can operate with longer time horizons and lower initial profit margins than their market-driven counterparts.
"Phase III is expected to continue the semiconductor industry chain 'neck' link investment." - Wikipedia / Industry Analysis
The central question remains whether capital alone can overcome the laws of physics and the complexities of modern lithography. While $47.5 billion is a staggering sum, the semiconductor industry is notoriously capital-intensive; a single advanced fab can cost upwards of $20 billion. However, Big Fund III is not acting in isolation. It serves as a signal to private capital and local governments to align their spending with national priorities.
As the fund accelerates its spending throughout 2025, the world should expect aggressive M&A activity within China's domestic borders and a ruthless push to replace foreign equipment in Chinese fabs. The success of this fund will not be measured by quarterly returns, but by whether China can produce a completely domestic smartphone or AI server within the decade. As tensions with the US persist, this fund represents Beijing's boldest gamble yet that it can innovate its way out of containment.
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