China has established a third state-backed fund to boost its domestic semiconductor industry.

Totaling 344 billion yuan ($47.5 billion), the funding announcement represents the third phase of the Chinese government’s Integrated Circuit Industry Investment Fund – otherwise known as the ‘Big Fund’ – and, according to local media, will be used to manage venture capital and assist investment companies.

The Big Fund was originally established in 2014, with the second phase following in 2019.

According to a report from Reuters, the Chinese finance ministry has a 17 percent stake in the latest iteration of the fund, making it the biggest shareholder. The China Development Bank Capital is the second largest, holding a 10.5 percent share.

According to a regulatory filing with China's National Enterprise Credit Information Publicity System, 17 other investors are also listed including the Industrial and Commercial Bank of China, China Construction Bank, Agricultural Bank of China, Bank of China, and Bank of Communications. Each of those entities holds an approximately six percent share in the fund.

In addition to managing venture capital, the third phase of the Big Fund will also focus on chip manufacturing equipment.

China is currently unable to legally purchase advanced semiconductor technology from abroad due to wide-ranging sanctions that have been put in place by the US government.

In order to remain competitive, China has invested heavily in its domestic semiconductor market however, the country has also managed to purchase prohibited GPUs for use by its military institutions, state-run AI research centers, and universities.

In 2022, it was reported that China was trying to build its own ASML competitor, Xtal. The business was founded by an ex-ASML engineer, who was accused of stealing intellectual property from the company.

In September 2023, the US government opened an investigation after it was first discovered the Huawei Mate Pro 60 contained 7nm, 5G-enabled chips produced in China by the partly state-owned SMIC.

Under its sanction regime, the US has sought to restrict the availability of 7nm chips in China by imposing export restrictions, and SMIC was barred by the US from obtaining the machines necessary for the production of 7nm chips in late 2020.

When the Department of Commerce started its investigation, at that time, the most advanced chip SMIC had been known to manufacture was a larger-scale 14nm semiconductor.