China set to invest $1.9bn in leading memory chipmaker

*The scale of the technology investment in the Asian country’s biggest maker of memory chips suggests Beijing is powering up spending on its beleaguered chip industry, reportedly struggling to circumvent the United States curbs on technology

Isola Moses | ConsumerConnect

Beijing’s main chip investment vehicle is stirring back to life.

China has pledged to invest $1.9 billion additional fund in the Asian country’s biggest maker of memory chips, a deal that may herald a renewed influx of government capital into an industry hemmed in by the United States (US) sanctions.

The National Integrated Circuit Industry Investment Fund Limited will commit 12.9 billion Yuan towards Yangtze Memory Technologies Company, according to a government Web site that discloses company registration information.

ConsumerConnect learnt Yangtze Memory is China’s closest rival to Samsung and Hynix in the chip industry.

The capital infusion from the Big Fund, as Beijing’s signature investment vehicle is commonly known, was slated for completion January 31.

It was learnt the ‘secretive’ Big Fund is Beijing’s primary vehicle for doling out capital to the country’s chipmakers.

The scale of the technology investment also suggests Beijing, again, is powering up spending on its beleaguered chip industry, which is struggling to circumvent US curbs on technology while grappling with slumping global demand.

The Yangtze Memory deal marks the fund’s most significant industry investment in months.

Senior leaders — frustrated by the lack of progress in developing local chip alternatives — launched a sweeping corruption campaign in 2022 that took down senior officials and several executives linked to the Big Fund, report stated.

It is also noted the Chinese economy is now bouncing back, potentially relieving government finances strained by the years-long Covid Zero effort.

Hubei-based YMTC is one of only a handful of domestic chipmakers within striking range of the global leaders, competing with South Korean giants Samsung Electronics Corporation and SK Hynix Inc. to provide memory chips for applications from smartphones to data center servers.

Seen as a national champion, the firm was placed last year on Washington’s lengthening US trade blacklists.

About Big Fund

Founded in 2014, it drew about $45 billion in capital and backed scores of companies, including Semiconductor Manufacturing International Corp. and YMTC.

The fund operated mostly behind the scenes and kept investment standards away from public view, which some analysts said undercut accountability.

Then in 2022, officials began investigating its head as well as executives from vehicles linked to the Big Fund for alleged graft. Its activities slowed as the probe persisted.

However, the need to galvanise China’s chip industry is growing more urgent as Washington slaps ever-tighter restrictions on the Asian giant.

The US is increasingly limiting the kind of chip-making equipment that American companies can export to Chinese customers, while enlisting allied countries so that key suppliers like the Netherlands’ ASML Holding NV and Japan’s Nikon Corp. join its technology blockade.

Despite years of effort, China hasn’t made much progress in narrowing the gap with the West, according to report.

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