South China Morning Post
More than nine listed firms have disclosed new investment made by the Big Fund since April last year, according to stock filings. These include Shenzhen listed Changchuan Technology, a semiconductor test equipment company, and GigaDevice Semiconductor, a Shanghai listed Integrated Circuit flash memory chip designer.However, these investments are only "tip of the iceberg" of the investment made by the Big Fund, said Ng Sze Ho, a tech analyst with China Renaissance Securities. "In reality, the fund is leading others, like industry funds raised by local governments, and private equity funds, into China's chip industry."The actual investment could be several times bigger than the figures reported in stock filing disclosures, he said.Employees dressed in dustproof clothing work at a chip wafer plant in mainland China operated by Hong Kong-listed Semiconductor Manufacturing International Corp, one of the early investee companies of the China National Integrated Circuit Industry Investment Fund. Photo: Handout alt=Employees dressed in dustproof clothing work at a chip wafer plant in mainland China operated by Hong Kong-listed Semiconductor Manufacturing International Corp, one of the early investee companies of the China National Integrated Circuit Industry Investment Fund. Photo: HandoutThe Big Fund initially raised about 138.7 billion yuan (US$21.8 billion), and had fully invested those proceeds by early 2018, official information showed.A second round of fundraising closed in April, raising an additional 120 billion yuan, Reuters reported.Interactive Infographics: Made in China 2025 " How Beijing is boosting its semiconductor industryMost of the capital from the first fundraising was invested into manufacturers of integrated circuits.Since 2015, the state investment fund has built up a 15.1 per cent stake in Semiconductor Manufacturing International Corporation (SMIC), China's biggest foundry company.How China's 'Big Fund' is helping the country catch up in the global semiconductor raceMore recently, the fund has been investing in smaller, emerging companies, ranging from material research, to integrated circuit design, to manufacturing and testing, Ng said."The biggest difference we see today is that China is pouring money into every chain of the chip industry," he said."It also makes it more difficult for people to track the Big Fund, because they are engaging in more pre-IPO fundraising activities, which are under very low disclosure requirements, or indirectly investing in companies, which are partially owned by shareholders in which the fund has stakes" Ng said.For example, Piotech, a Chinese maker of deposition equipment used to manufacture nano-scale semiconductors, has received investment from the fund. The company is considered strategically important because it is one of the few Chinese companies to compete in an industry dominated by US companies, Ng said.AMEC, a Shanghai based micro-fabrication equipment firm, said the Big Fund is among its shareholders with a stake of at least 5 per cent. The information surfaced in a March listing prospectus ahead of a planned IPO on Shanghai's newly created STAR board in July.Beijing tries to play down 'Made in China 2025' as Donald Trump escalates trade hostilities"Although the official rhetoric on China's tech dream quieted down after the trade war, we feel the on-the-ground work actually picked up," said Frank Xu, a portfolio manager with Hong Kong based hedge fund Q Fund Management."We took a more careful look into the Chinese photoresist manufacturers this month ... and found almost all the Chinese peers have been invested in by the Big Fund in the past year," Xu said.In a July research report entitled "Evolving Made in China 2025", German research institute Merics said China has launched at least 20 different projects related to its national strategy, and issued 445 authoritative documents detailing implementation measures as of the end of 2018.Local governments continue to be highly active translating Beijing's national vision into local directives, the report said.The report said that Beijing has toned down references to its future technological development, directing media coverage and official statements to "dial back" on mentions of MIC2025 and terms such as "self sufficiency rate".This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2019 South China Morning Post Publishers Ltd. All rights reserved. Copyright (c) 2019. South China Morning Post Publishers Ltd. All rights reserved.