China Creates Mega $47.5B Chip Fund in Semiconductor Push
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China Creates Mega $47.5B Chip Fund in Semiconductor Push

Story Highlights

China has set up a mega $47.5 billion fund to boost its semiconductor sector amid a rift with the U.S.

The technological and geopolitical rift between the U.S. and China continues. In its effort to bolster its semiconductor industry, the Asian nation has established a massive $47.5 billion chip fund.

The Mega Fund

Notably, known as Big Fund III, this is China’s third semiconductor fund. According to Bloomberg, this is China’s largest chip fund ever. It includes investments from the country’s central government, state-owned banks, as well as enterprises. The massive capital investment comes amid major U.S. sanctions on China’s Huawei Technologies.

And the Wider U.S.-China Rift

At the other end of the race for technological supremacy, the 2022 Chips and Science Act in the U.S. is pumping grants worth $39 billion in chip producers and offering around $75 billion in loans and guarantees. Meanwhile, China has been increasingly pushing for self-reliance in various sectors. The country has urged its EV producers to opt for locally-made chips. Chinese companies have also been heavily importing much-needed chip-making equipment in recent times.

This competition between China and the U.S. is also spilling into other areas. China dumping billions in U.S. Treasuries from its holdings and shoring up its gold reserves at record pace could also potentially weaken the U.S. dollar. These developments, coupled with the geopolitical tensions around Taiwan, could also potentially impact tech majors such as NVIDIA (NASDAQ:NVDA), Micron (NASDAQ:MU), and Taiwan Semiconductor (NYSE:TSM).

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