The Shanghai Semiconductor Industry Investment Fund (SSIIF), managed by the city's government to bolster the local chip industry, has expanded its size to approximately $2 billion following a recent funding round.

The SSIIF secured 6.9 billion Yuan ($963 million) from investors, primarily state-backed firms in Shanghai, increasing its capital to 14.5 billion Yuan, according to data from the business registry database Qichacha. 

This capital infusion is anticipated to enhance the fund’s ability to support projects crucial to China’s goal of achieving self-sufficiency in semiconductors, underscoring Shanghai’s dedication to advancing chip technology, South China Morning Post reports.

The SSIIF is one of several funds established by local Chinese governments to bolster their semiconductor industries. It complements the China Integrated Circuit Industry Investment Fund, a national initiative commonly referred to as the “Big Fund.”

Following the recent capital injection, Shanghai Science & Technology Venture Capital Group retains its position as the largest shareholder of the SSIIF with a 35% stake. Shanghai Guosheng Group and Shanghai International Group are the next largest shareholders, each holding an 18% stake.

Launched in 2016, the first phase of the SSIIF invested billions of Yuan into key semiconductor companies, including major chip foundries and equipment manufacturers. Notable recipients include Semiconductor Manufacturing International Corporation (SMIC), China’s largest contract chip maker, HLMC, a subsidiary of Hua Hong Group, and ACM Research Shanghai, a producer of semiconductor cleaning tools.

Furthermore, the second phase of the SSIIF was launched in May 2020 with 5.4 billion Yuan in equity investments from six key backers, including Shanghai Science & Technology Venture Capital Group, Shanghai Guosheng Group, and Shanghai International Group. By 2022, the fund's capital base had grown to 7.6 billion Yuan.

Subsequently, the SSIIF’s recent funding round comes on the heels of the Shanghai government’s launch of the Integrated Circuit Industry Parent Fund in late July, which allocated 45 billion Yuan for investments in chip design, manufacturing, packaging, equipment, and materials.

In recent years, China has provided significant subsidies to key companies within its domestic semiconductor supply chain. This is part of Beijing’s broader strategy to develop local alternatives to foreign technologies, as US export controls have restricted Chinese access to advanced chip technologies.