US investors fund Chinese chip startups – Community News
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US investors fund Chinese chip startups

A survey of US venture capital investments found that more money has flowed into Chinese chip companies as Chinese government support reduces the risk profile of such investments.

Data collected by Rhodium Group for: The Wall Street Journal showed a doubling in US investment in China’s semiconductor industry from 2017 to 2020 over the previous four-year period. The investigation focused on US-based entities making equity investments in China and did not include dollar amounts invested.

Strategic investors such as Intel Capital joined financial firms on the list of companies taking stakes in China’s chip industry. Fifty-eight deals were reported for the four-year period 2017 through 2020.

US Senators Bob Casey (D., Pa.) and John Cornyn (R., Texas) have proposed legislation that would require government oversight of US outbound investments, a move opposed by the US Chamber of Commerce and US-China Business. council.

Because US policies have made it more difficult for some Chinese companies to buy US chips, the Beijing government has funded domestic startups to fill the gap. That government support makes the startups attractive investments, analysts said The Wall Street Journal.

More than 22,800 new semiconductor companies were established in China in 2020, according to the US-based Semiconductor Industry Association, a 195 percent increase from 2019.

Even before the US government stopped Huawei and ZTE from buying US chips, the Chinese government had made self-sufficiency in the semiconductor market a national priority. The 2015 “Made in China” initiative challenged domestic manufacturers to supply 70 percent of the country’s chips by 2025.

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