Han Xiaomin Discusses US Trade Blacklist's Impact on China's Semiconductor Funding

Steep Decline in Funding for China’s Semiconductor Sector

China’s semiconductor sector is feeling the squeeze, with a significant one-third decline in funding inflows this year, largely driven by US restrictions on advanced chips and overcapacity in legacy technologies. According to local industry research firm JW Insights, the total number of investment deals recorded in the first 11 months of 2024 was 677, indicating a 35.9 percent year-on-year drop. Simultaneously, total funding plummeted by 32.4 percent.

Key Investment Deals

• The largest funding round was led by ChangXin Memory Technologies (CXMT), which secured 10.8 billion yuan (US$1.48 billion) in March from several backers, including GigaDevice and the Hefei Industry Investment Group.
• Mobile chip producer Unisoc raised 6 billion yuan this year from state-owned entities, gearing up for a potential IPO in 2025.

Government Influence in Semiconductor Investment

Amid escalating tensions in the US-China tech war, government-backed funding has taken the lead in China’s semiconductor investments. The China Integrated Circuit Industry Investment Fund, known as the “Big Fund,” has played a pivotal role since its establishment in 2014.

US Semiconductor Market Outpaces China

Recent data reveals that the US semiconductor market surpassed mainland China in the third quarter of 2024, emerging as the world’s largest single market. Han Xiaomin, general manager of JW Insights, stated, “The AI boom has driven a surge in demand, but domestic supply chain restrictions in China hinder progress.”

Future Outlook for China’s Chip Industry

Despite the struggle, projections indicate that the integrated circuit market in mainland China is expected to reach US$186.5 billion by 2024, reflecting a 20.1 percent year-on-year increase. This suggests that while challenges persist, opportunities may still arise for resilience and growth in China’s semiconductor landscape.