China Chip Fund: $50B to Counter US Restrictions
China’s Big Fund III is dramatically altering its investment strategy, zeroing in on lithography tools and EDA software-a direct response to escalating US restrictions on semiconductor technology. This shift aims to fortify China’s domestic chipmaking capabilities, prioritizing areas where it currently lags global leaders. The initial focus on bolstering domestic equipment has given way to a concentrated effort on lithography and EDA, as export controls limit access to critical technologies. Expect major investments under the revised plan, potentially benefiting companies like SMEE and Empyrean Technology. Encouraging mergers among companies is also central to the plan. For insightful analysis, visit News Directory 3. This strategic pivot signifies a renewed commitment to overcoming technological hurdles.Discover what’s next for China’s semiconductor ambitions.
China’s Big Fund Shifts Focus to Lithography,EDA Software
updated June 27,2025
China’s Big Fund III is recalibrating its investment strategy to prioritize lithography tools and electronic design automation (EDA) software,addressing critical gaps in its semiconductor industry. This adjustment comes amid increasing U.S. restrictions on China’s access to vital chip technologies.
The National Integrated Circuit Industry Investment Fund, or Big Fund III, initially aimed to bolster domestic chipmaking equipment. However,export controls now prevent companies like ASML and Applied Materials from selling advanced tools to Chinese firms without licenses.
While China already produces some world-class fabrication tools, its lithography capabilities lag behind industry leaders. The fund now seeks to concentrate on this area, along with EDA software, as companies like Cadence and Synopsys face export license requirements for sales to China.
Bloomberg reported that the Big Fund III is poised to make significant investments under its revised plan. Potential beneficiaries include Shanghai Micro Electronics Equipment (SMEE), a lithography tool manufacturer, and Empyrean Technology, which develops EDA software. Huawei may also explore building its own lithography systems,though it likely won’t require funding from the Big Fund III.
fund executives also plan to encourage mergers among domestic companies to foster stronger, more innovative entities. Streamlining spending is also a goal, as the fund has only secured a portion of its planned $47 billion. Chinese authorities are reportedly being more selective in allocating resources after previous investments yielded limited results,according to Bloomberg. Officials anticipate the funding shortfall will be temporary.
What’s next
The shift in focus for china’s Big Fund III signals a renewed commitment to overcoming key technological bottlenecks in its semiconductor industry,particularly in lithography and EDA software,as it navigates increasing international trade restrictions.