China is investing an additional $47.5 billion in the chip sector.

 According to documents released by a government-run body, China is stepping up its ambition to control the most advanced technologies of the future by establishing the largest-ever semiconductor state investment fund.

In an effort to curb Beijing's aspirations, the US is imposing extensive limitations on the sale of American chips and chip technology, prompting the creation of the $47.5 billion fund.

The fund highlights Chinese President Xi Jinping's efforts to strengthen China's standing as a tech powerhouse, with investments from six of the biggest state-owned banks in the nation, including ICBC and China Construction Bank.

Beijing has established a goal for China to become a global leader in a number of areas, including artificial intelligence (AI), 5G wireless, and quantum computing, via its Made in China 2025 road map.

The third phase of the China Integrated Circuit Industry Investment Fund is the newest investment vehicle. The National Enterprise Credit Information Publicity System states that on Friday, the so-called "Big Fund" was formally established in Beijing.

The fund's initial phase was established in 2014 with 138.7 billion yuan, or $19.2 billion. Five years later, the second phase was founded, registering a capital of 204.1 billion yuan ($28.2 billion).

The Ministry of Industry and Information Technology stated during the first phase's 2014 announcement that the investments will largely fund chip design, manufacture, equipment, and materials with the goal of bringing the nation's semiconductor industry up to international standards by 2030.

Obstacles in the way?

Recent years have seen a number of corruption incidents involving the "Big Fund." China's anti-graft watchdog began a crackdown on the semiconductor business in 2022 and was looking into some of the top executives in the nation's state-owned chip giants. The nation's top prosecutor said in a statement that Lu Jun, the former CEO of Sino IC Capital, which oversaw the "Big Fund," was the subject of an investigation and an indictment on bribery allegations in March.

There are other obstacles than scandals that might seriously jeopardize Xi's efforts to bring China up to speed on the digital front.

A comprehensive set of export prohibitions was published by the US in October 2022, prohibiting Chinese enterprises from purchasing advanced chips and chip-making equipment without a license. Additionally, the Biden administration has put pressure on Japan and the Netherlands, two of its allies, to implement their own limits.

Beijing retaliated last year by placing export restrictions on two vital raw materials that are essential to the world's chip manufacturing sector.

There are other obstacles than scandals that might seriously jeopardize Xi's efforts to bring China up to speed on the digital front.

A comprehensive set of export prohibitions was published by the US in October 2022, prohibiting Chinese enterprises from purchasing advanced chips and chip-making equipment without a license. Additionally, the Biden administration has put pressure on Japan and the Netherlands, two of its allies, to implement their own limits.

Beijing retaliated last year by placing export restrictions on two vital raw materials that are essential to the world's chip manufacturing sector.

"No force can impede China's scientific and technology growth," Xi declared in a meeting with Dutch Prime Minister Mark Rutte in March.

The only company in the world producing the extreme ultraviolet lithography equipment required to produce cutting-edge semiconductors is ASML, located in the Netherlands. The company announced in January that it was not allowed to send certain of its lithography machines to China by the Dutch authorities.