In the technological standoff between the USA and China in the semiconductor market, another milestone is looming: on March 8, Bloomberg reported, citing sources, that the authorities of China intend to attract about $27 billion in a target fund (the so-called Big Fund), which will be filled with funds from local authorities and state-owned companies. The money will be used to develop China’s semiconductor industry. Bloomberg notes that this is the third stage of attracting funds to the fund – China’s authorities filled it in 2014 and 2019 to support local microelectronics manufacturers.
The attempt to refill the fund again may indicate the desire of Chinese authorities to reduce the industry’s dependence on American technologies and production resources. Access of Chinese companies to both the former and the latter is already limited, and it is not only about new and advanced production techniques. For example, on March 12, FT reported that Samsung and SK Hynix, fearing secondary US sanctions, stopped selling even decommissioned equipment in China. Apparently, this is the direction in which the fund’s funds will be invested.
Proposals to create a kind of analogue of the Chinese fund for investments in the semiconductor sector have also been voiced in Russia. For example, last autumn, the president of Element Group, Ilya Ivantsov, proposed creating a national microelectronics fund. It involves combining the efforts of the state and large companies willing to invest in the development of new technologies, launching capacities, and producing expensive equipment.
Although there is no information that the fund has been established and is being filled with money, I would not be surprised if in the coming years a number of large companies in Russia start pooling funds to finance breakthrough R&D and even invest in production facilities that will pay off at best in decades.
In the last year, non-specialized players have also started showing interest in the industry. According to my information, one of the largest banks in the country has invested substantial funds in developing chips for AI; Russian systems integrators and electronic distributors, including T1 and Fplus, are openly talking about interest in investing in the segment. Sooner or later, they will come to the idea of cooperation.
However, the problem is that even the investments of a number of large Russian companies may not be enough for a wide range of projects. Despite the activation in the last two years, as experts and officials have repeatedly acknowledged, microelectronics in the country will have to be developed almost from scratch. In this case, participants in such cooperation will not have the opportunity to take risks, spending the fund’s funds on experimental solutions. Money will be tight, and they will have to hit the bullseye right away.