Crafting the Future: China's Ambitions and the GLOBAL RACE for Semiconductor Sovereignty

As technology increasingly powers everything, competition for semiconductor sovereignty grows only more fierce. Nowhere is this dynamic more evident than in China’s massive push for global chip independence, symbolised most recently by the country’s $47 billion semiconductor fund.

The Essence of Big Fund III: China's Leap Towards Chip Sovereignty and LEGACY

The Evolution and Impact of China's Semiconductor Funds

‘The Big Fund’ is the name given to China’s National Integrated Circuit Industry Investment Fund, which has spawned several iterations: Big Fund I, starting in 2014; Big Fund II, which was announced in 2017; and just a couple of weeks ago, Big Fund III, with a whopping 344 billion yuan (about $47.5 billion), the largest chip fund in the world. The evolution of the Big Fund parallels the rise of commitment to semiconductor independence in China as well as a changing technological strategy in the global arena. The significant difference between Big Fund II and Big Fund III dwarfs earlier investments and signifies nothing less than a blueprint for China’s mission to self-reliance in semiconductors.

Navigating the Intricacies of Chip Sovereignty and LEGACY

Chip sovereignty is not about producing technology for technology’s sake; it has geopolitical and economic implications about securing a nation’s position in global hierarchies of technological power and economic stature. The creation of Big Fund III reflects China’s resolve to reduce its reliance on foreign semiconductor technology in light of the simmering global tensions that have laid bare the vulnerabilities of dependencies.

The Geopolitical Chip Chessboard and LEGACY

As the quiet yet very real historic chip war continues, consider China’s steady efforts to develop its own legacy and advanced semiconductor capacity, or the fact that every major industrial cluster in the world – from the US and Europe to Taiwan, India, and elsewhere – seeks to reduce its dependencies. Even a cursory examination of these dynamics suggests a worldwide pivot toward what can be called a new age of tech sovereignty. After all, remember that controlling the semiconductor means controlling the future. And with global semiconductor security further fraught by the strategic position of Taiwan – itself critical to these efforts – we are seeing that semiconductors are indeed a global balancing act.

The Ripple Effects of China's Semiconductor Strategy and LEGACY

Legacy Chips and the Automotive Sector

Surprisingly, though, the action is not centred on next-generation semiconductor technology. Instead, legacy chips – the kind that power cars and refrigerators – have become a focal point. According to US Commerce Secretary Gina Raimondo, China produces much of the world’s legacy chips, and this reflects the nation’s ‘growing sophistication and broadening strategic diversification’ when it comes to semiconductors.

Addressing the Advanced Chip Conundrum

Dual circulation goes as far as to set Big Fund III into more advanced technologies such as High Bandwidth Memory (HBM) chips on which future AI, 5G and IoT are predicated to help China place itself higher on the semiconductor ladder, especially the high-end one. And in so doing, it has also indirectly challenged international competitors to rethink their own semiconductor strategies.

Global Responses and the Semiconductor Ecosystem

Other tech victors have also made substantial investments in the global semiconductor arms race. The US CHIPS Act and the EU’s Chips Act are examples of efforts to shore up domestic semiconductor power which is part of a broader tech nationalism that is transforming the global economy.

The Global Semiconductor Conundrum: Between Cooperation and Competition

Recent activity suggests a balancing act of co-operation and competition as nations fight for semiconductor sovereignty. In some ways, China’s Big Fund III catapults it towards more domestic technological autonomy, but in other ways the global ecosystem stays just as interconnected as ever. Replacing the foreign circuitry will take time, especially as innovation happens at a slow cadence. China, and the world, have a tough road ahead.

The Legacy of Semiconductor Innovation

Shrouded in the grandeur of these nationalist schemes are the stories of futuristic innovation and enduring determination that form part of the semiconductor saga. China’s legacy chip capacity, western startups’ excitement, and diamond semiconductors redefine the path to semiconductor sovereignty.

The Legacy of the Semiconductor Race

The story of China’s $47 billion fund and its quest for chip sovereignty is as much a saga about restructuring the world economic and geopolitical order as it is about technology. As the world begins its tentative journey towards semiconductor sovereignty, the eventual outcome of this global race will reverberate through the trajectories of countries’ technology development, innovation and international relations.

Photo courtesy Taiwan Semiconductor Manufacturing Co.Legacy is a big part of this picture: legacy in the capital-intensive semiconductor sector is the geopolitical and economic importance of the choices we make today. The legacy to which China is aspiring, in creating Big Fund III and a host of other coordinated projects, is technological independence, economic strength and a new balance of global power. Legacy is a fraught business for any country trying to pick a side between American and Chinese semiconductor players – it is also subject to international rules, coordination and, yes, occasional cheating. Where should the ‘legacy’ of the global semiconductor sector lead us next?