Chinese Semiconductor Startup Raises $5.4B in Funding as Beijing Bolsters Tech Efforts
Hefei-based semiconductor startup Changxin Xinqiao Memory Technologies Inc. has successfully raised 39 billion yuan ($5.4 billion) in funding from government-backed investors, signaling Beijing’s commitment to achieving technological self-sufficiency and countering US sanctions. This latest funding round saw Changxin Xinqiao secure 14.6 billion yuan from the state-backed China Integrated Circuit Industry Investment Fund Phase II, as well as funding from two other investors affiliated with the local government.
Changxin Xinqiao, founded in 2021, shares some shareholders and its general manager with China’s prominent DRAM chipmaker, Changxin Memory Technologies Inc. Both companies are headquartered in Hefei. Changxin Memory aims to compete with global leaders such as Micron Technology Inc. and Samsung Electronics Co. In fact, Bloomberg News previously reported that Changxin Memory is planning to file for an initial public offering in China, with a potential valuation exceeding $14.5 billion.
Amid US efforts to limit China’s access to cutting-edge chip technologies, Beijing remains determined to make breakthroughs in its semiconductor industry. Chinese chipmaker Semiconductor Manufacturing International Corp. has already achieved success with the release of a 5G phone by Huawei Technologies Co. This phone features silicon produced by Semiconductor Manufacturing International Corp., showcasing China’s progress in the semiconductor sector.
The Big Fund, Beijing’s primary financing vehicle for long-term semiconductor objectives, has been increasing its funding efforts throughout the year. According to Tianyancha data, it has made at least a dozen investments in 2023, including the substantial investment in Changxin Xinqiao. The fund, established in 2014, accumulated approximately $45 billion in capital and supported numerous companies, including US-blacklisted Yangtze Memory Technologies Co., prior to a graft probe that limited its activities.
As the US and China seek to ease tensions, President Joe Biden will meet with Chinese President Xi Jinping at the Asia-Pacific Economic Cooperation summit in San Francisco later this month. However, there are no indications that Washington will loosen any technological restrictions, especially after Beijing tightened rules on the use of Apple Inc. handsets in government agencies and state-owned enterprises.
The funding received by Changxin Xinqiao highlights China’s determination to bolster its semiconductor industry and reduce its dependence on foreign technologies. With substantial government support, companies like Changxin Xinqiao have the opportunity to compete and potentially become major players in the global semiconductor market.
In conclusion, China’s semiconductor industry continues to attract significant investments as the country pushes for technological advancements and self-reliance. Through funds like the Big Fund, Beijing is actively supporting startups like Changxin Xinqiao, enabling them to develop and compete with industry leaders. As the US and China navigate their complex relationship, the semiconductor sector remains a critical battleground for both nations.
