Semiconductor startup Changxin Xinqiao Memory Technologies Inc. has recently secured an impressive 39 billion yuan ($5.4 billion) in funding from government-backed investors. This substantial investment not only reinforces China’s commitment to achieving technological self-sufficiency but also serves as a response to US sanctions. With the backing of state-supported entities, Changxin Xinqiao is poised to make significant strides in the highly competitive semiconductor industry.
China’s Ongoing Pursuit of Technological Advancement:
Amidst efforts by the US to restrict China’s access to cutting-edge chip technologies, Beijing remains determined to make breakthroughs in its semiconductor industry. The substantial investment in Changxin Xinqiao reflects China’s commitment to enhancing its capabilities and reducing dependence on external sources. This commitment aligns with Beijing’s extensive ambitions and its ongoing clashes with US trade restrictions.
Changxin Xinqiao’s Impressive Financing Round:
In its most recent financing round, Changxin Xinqiao successfully secured 14.6 billion yuan from the China Integrated Circuit Industry Investment Fund Phase II, a government-backed entity. The company also received funding from two other investors affiliated with the local government. The significance of this substantial investment indicates China’s confidence in Changxin Xinqiao’s potential to compete with global leaders in the semiconductor industry.
Synergy with Changxin Memory Technologies:
Changxin Xinqiao shares some shareholders and its general manager with China’s leading DRAM chipmaker, Changxin Memory Technologies Inc. Both companies, headquartered in Hefei, aspire to challenge global giants such as Micron Technology Inc. and Samsung Electronics Co. Earlier this year, it was reported that Changxin Memory Technologies is planning an IPO in China that could value the chipmaker at over $14.5 billion. The shared resources and expertise between the two companies provide a robust foundation for future growth and innovation.
The Big Fund’s Strategic Role:
The significant investment in Changxin Xinqiao is spearheaded by the Big Fund, China’s flagship semiconductor fund. Following an investigation into corruption involving its former leaders, the Big Fund has re-emerged and gradually increased its funding efforts throughout the year. Over the course of 2023, it has already made several strategic investments, including this latest one in Changxin Xinqiao. With a history of backing companies like Yangtze Memory Technologies Co., despite being blacklisted by the US, the Big Fund plays a pivotal role in China’s long-term semiconductor objectives.
The Road Ahead:
China’s semiconductor industry continues to evolve, driven by the nation’s unwavering determination to achieve technological self-sufficiency. While tensions persist between the US and China, with both countries seeking to ease trade conflicts, it remains unlikely that Washington will relax its restrictions on technology exports to China. Consequently, this investment in Changxin Xinqiao reflects a strategic move by China to bolster its domestic semiconductor capabilities and reduce reliance on external sources.
Changxin Xinqiao’s recent funding round, propelling it to secure a remarkable $5.4 billion, signifies China’s commitment to bolstering its semiconductor industry and countering US sanctions. As Beijing continues to invest in companies at the forefront of technological advancements, it aims to achieve long-term self-sufficiency in this critical sector. With the backing of government-affiliated investors, Changxin Xinqiao is well-positioned to become a formidable player in the global semiconductor market.
Market Capital Research 