China has launched its third state-backed investment fund to bolster its semiconductor industry, with a registered capital of 344 billion yuan (approximately US$47.5 billion), according to a filing with a government-run companies registry. This substantial investment underscores President Xi Jinping's commitment to achieving self-sufficiency in semiconductors, a goal that has gained increased urgency following a series of US export control measures aimed at preventing China from acquiring advanced chips that could enhance its military capabilities.

The establishment of this fund has positively impacted Chinese chip shares, with the CES CN Semiconductor Index surging more than 3 percent, marking its biggest one-day gain in over a month. The third phase of the China Integrated Circuit Industry Investment Fund, known as the "Big Fund," was officially established on May 24 and registered under the Beijing Municipal Administration for Market Regulation, according to the National Enterprise Credit Information Publicity System, a government-run credit information agency. This phase is set to be the largest of the three funds launched by the Big Fund.

The Ministry of Finance is the largest shareholder, holding a 17 percent stake and contributing 60 billion yuan. China Development Bank Capital follows as the second-largest shareholder with a 10.5 percent stake. Seventeen other entities are listed as investors, including five major Chinese banks: Industrial and Commercial Bank of China, China Construction Bank, Agricultural Bank of China, Bank of China, and Bank of Communications, each contributing around 6 percent of the total capital. The Ministry of Finance did not immediately respond to Reuters' request for comment.

This investment reflects China's strategic effort to counteract the impact of US restrictions and accelerate the development of its domestic semiconductor industry, a crucial component for technological and economic independence.