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HomeBusinessChina invests more money in chip maker's biggest state fund

China invests more money in chip maker’s biggest state fund

Chinafile photo: Reuters

China is investing huge amounts to increase its dominance in the semiconductor industry. The country is creating the highest ever state fund for investment in this industry.

Beijing is trying to build up its capabilities in the wake of sanctions imposed by the United States to curb China’s rise in high-tech. As part of that, China will invest 4,750 million dollars in the semiconductor industry.

According to CNN news, China’s six major state-owned banks like ICBC and China Construction Bank will invest in this fund. Through this, Chinese President Xi Jinping wants to become a superpower in the world of high technology.

Through the ‘Made in China 2025’ program, China has set ambitions to become a global leader in several industries including artificial intelligence, 5G wireless technology.

The latest $4,750 million fund is the third phase of the China Integrated Circuit Industry Fund, known as the Big Fund. This fund was given last Friday.

Meanwhile, after the news of this investment was published, the share price of China’s top chip companies increased. Shares of Semiconductor Manufacturing International Corporation (SMIC), the world’s third-largest contract chip company, rose 7 percent. Apart from this, China’s second largest chip manufacturer Hua Hong Semiconductor’s share price rose 13 percent. The company makes chips for Huawei.

This fund was first established in 2014. In the first phase, the Chinese government gave 13 thousand 870 million dollars. In the second phase, 2 thousand 820 million dollars were given in 2019.

According to the news, the purpose of this fund is to take China’s semiconductor industry to the world level by 2030. The funds will mainly be used for chip manufacturing, design and materials development.

But the history of this fund in China is not very happy. There are allegations of misappropriation of this fund. Along with this, the US has imposed a ban on the export of high-tech products to China, which has threatened the rise of China in the chip industry.

In response, China imposed a ban on the export of raw materials for making chips. Despite Western bans, Huawei took everyone by storm last year when it launched a seven-nanometer processor-equipped smartphone.

Meanwhile, the lithography equipment required for the production of high-quality semiconductors is manufactured only by the ASML company in the Netherlands. But the Dutch government has imposed restrictions on the export of this device to China.

In this reality, Chinese President Xi Jinping told Dutch Prime Minister Mark Rutte last March that no one can stop China’s scientific and technological rise.