Tech Diplomacy Now: China launches its latest CHIPS fund
Beijing announced the third installment of the semiconductor subsidies called the “Big Fund,” with the objective of building an advanced indigenous semiconductor industry.
TABLE OF CONTENTS
Top News of the Week
Announcements
Latest News
Technology Strategy and Policy
Artificial Intelligence
Telecommunications Networks and Infrastructure
Critical Minerals
Synthetic Biology
Quantum
Advanced Aerospace Technology
Semiconductors and Microelectronics
Energy and Climate
Opinion and Commentary
Top News of the Week – China’s CHIPS Act… is the third time the charm?
This week, Beijing announced the third installment of the semiconductor subsidies fund that it started a decade ago. Called the “Big Fund,” with the first $21 billion in 2014, another $29 billion in 2019, and a massive corruption scandal in 2022, perhaps this third phase of $47 billion will finally achieve the PRC’s objective of building an advanced indigenous semiconductor industry.
Key Takeaways:
In June 2014, the PRC State Council proposed a national investment fund called the “China Integrated Circuit Industry Investment Fund, ICF or the “Big Fund.”
The 2014 Fund, set up by Sino IC Capital, a party-controlled entity, and China Development Bank, a state-owned bank, raised about $21.8 billion and deployed the capital in the form of investments in the PRC semiconductor industry with the goal of building an indigenous advanced semiconductor industry in the PRC.
The Fund operates as a “corporate entity” that appears private, but it operates under the complete control of the Ministry of Finance and the Ministry of Industry and Information Technology (MIIT).
A large proportion of the initial funding came from the taxes collected by MIIT through its control of the state-monopoly on cigarette sales.
In 2015, the fund and its plans for advanced semiconductors was rolled up underneath the Government’s massive industrial policy, “Made in China 2025.”
In 2019, with little to show for the 2014 investments, the State Council doubled down and set up “Big Fund II” under ICF and raised another $29 billion for further investments.
By 2022, ICF had gone dormant as corruption investigations racked the Sino IC Capital’s leadership with the director of the fund disappearing in July 2022 into the Party’s secret prison system.
In March 2023, the PRC Government appointed a new director of the ICF, vowing that the corruption had been cleaned up and a year later the PRC Government is placing another $47 billion under the ICF’s control.
Much of the reporting on this latest round of financing suggests that the Chinese Government id only setting up this fund in reaction to U.S. restrictions on semiconductors, but that ignores the decade-long history of this effort by the Chinese Government that predates the October 2022 chip restrictions.
More Background:
China Raises $48 Billion for Semiconductor Fund to Bolster Chip-Making Capabilities – WSJ, May 27, 2024
China’s Scandal-Plagued Semiconductor ‘Big Fund’ Gets New Chief – Caixin, March 13, 2023
Five things to know about China's scandal-struck chip industry 'Big Fund' – Think China, August 11, 2022
Corruption is sending shock waves through China’s chipmaking industry – MIT Technology Review, August 5, 2022
China watchdog says is probing the head of chip-focused Big Fund – Reuters, August 1, 2022
The Failure of China’s Microchip Giant Tests Beijing’s Tech Ambitions – NYTs, July 19, 2021
China's Tsinghua Unigroup defaults on $198 million bond: sources – Reuters, November 16, 2020
China completes second round of US$29 billion Big Fund aimed at investing in domestic chip industry – SCMP, July 26, 2019
Announcements
Krach Institute CEO, Michelle Giuda addresses Indiana Economic Development Corporation’s 2024 Global Economic Summit
Last week, Michelle Giuda, CEO of the Krach Institute for Tech Diplomacy at Purdue, joined esteemed panelists during the 2024 Indiana Global Economic Summit to discuss how economic headwinds, geopolitical tensions, and the ongoing digital transformation of trade processes are reshaping diplomacy and the global marketplace.
Navigating this dynamic landscape requires an informed and strategic global approach, which is a key reason The Krach Institute for Tech Diplomacy recently launched the Tech Diplomacy Academy.
“Our success economically and technologically is happening in the context of a contest between freedom and between authoritarianism. One of the things that we've just done is launch the Tech Diplomacy Academy, which is the world's first and only online education platform that is teaching government, business, technology and citizen leaders on not just technology, but on the strategic and security considerations around it.”
The panel was moderated by Ambassador Lee Feinstein, Former U.S. Ambassador to Poland and featured Kate Kalutkiewicz, Senior Managing Director, McLarty Associates, Ambassador Jovita Neliupšienė, EU Ambassador to the United States, European Union, Ambassador Pjer Šimunović, Ambassador of Croatia to the United States, Ministry of Foreign and European Affairs of the Republic of Croatia and Nina Tangri, Associate Minister of Small Business, Ontario Associate Ministry of Small Business.
“The way that we win this contest is through out innovating and outcompeting our adversaries. It's unleashing our superpowers, which are innovation and enterprise.” Guida said. “That's not going to happen in Washington, D.C. That's not going to happen in Brussels, and it's not going to happen at the U.N. That innovation is going to happen here, in Indianapolis.”
You can watch the full Indiana Global Economic Summit panel discussion here:
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Telecommunications Networks and Infrastructure
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Critical Minerals
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Synthetic Biology
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Quantum
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Semiconductors and Microelectronics
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Chinese firms make headway in producing high bandwidth memory for AI chipsets – Reuters, May 15, 2024
Energy and Climate
The Great EV Glut – The Wire China, May 19, 2024
E.V. Sales Are Slowing. Tesla’s Are Slumping. – NYTs, April 15, 2024
Opinion and Commentary
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Taiwan Is the New Berlin – Dmitri Alperovitch, Foreign Affairs, May 15, 2024
Putin's Preparing Better Than Us for a Long War – Marc Champion, Bloomberg, May 13, 2024
About: Tech Diplomacy Now
The Krach Institute for Tech Diplomacy at Purdue is the world’s preeminent trusted technology accelerator. As the leader of the new category of Tech Diplomacy, the Institute integrates technology expertise, Silicon Valley strategies, and foreign policy tools to build the Global Trusted Tech Network of governments, companies, organizations and individuals to accelerate the innovation and adoption of trusted technology and ensure technology advances freedom.