China is doubling down on its plan to dominate advanced technologies of the future by setting up its largest-ever semiconductor state investment fund, according to information posted by a government-run agency.

Worth $47.5 billion, the fund is being created as the US imposes sweeping restrictions on the export of American chips and chip technology in a bid to throttle Beijing’s ambitions.

With investments from six of the country’s largest state-owned banks, including ICBC and China Construction Bank, the fund underscores Chinese leader Xi Jinping’s push to bolster China’s position as a tech superpower.

With its Made in China 2025 road map, Beijing has set a target for China to become a global leader in a wide range of industries, including artificial intelligence (AI), 5G wireless, and quantum computing.

The latest investment vehicle is the third phase of the China Integrated Circuit Industry Investment Fund. The “Big Fund,” as it is known, was officially established in Beijing on Friday, according to the National Enterprise Credit Information Publicity System.

The first phase of the fund was set up in 2014 with 138.7 billion yuan ($19.2 billion). The second phase was established five years later, with a registered capital of 204.1 billion yuan ($28.2 billion).

The investments aim to bring the country’s semiconductor industry up to international standards by 2030 and will pump money primarily into chip manufacturing, design, equipment and materials, the Ministry of Industry and Information Technology said when launching the first phase in 2014.

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Roadblocks ahead?

The “Big Fund” has been hit by corruption scandals in recent years. In 2022, the country’s anti-graft watchdog launched a crackdown on the semiconductor industry, investigating some of China’s top figures in state-owned chip companies. Lu Jun, former chief executive of Sino IC Capital, which managed the “Big Fund,” was probed and indicted on bribery charges in March, according to a statement by the country’s top prosecutor.

These scandals aren’t the only roadblocks that could severely undermined Xi’s ambitions to get China to achieve tech self-reliance.

In October 2022, the US unveiled a sweeping set of export controls that ban Chinese companies from buying advanced chips and chip-making equipment without a license. The Biden administration has also pressed its allies, including Netherlands and Japan, to enact their own restrictions.

Beijing hit back last year by imposing export controls on two strategic raw materials that are critical to the global chipmaking industry.

The new chip fund is not only a defensive move to counter Western sanctions, but also part of Xi’s long-held ambitions to make China a global leader in technology.

Last year, China’s Huawei shocked industry experts by introducing a new smartphone powered by a 7-nanometer processor made by China’s Semiconductor Manufacturing International Corporation (SMIC).

At the time of the Huawei phone launch, analysts could not understand how the company would have the technology to make such a chip following sweeping efforts by the United States to restrict China’s access to foreign technology.

In a meeting with the Dutch Prime Minister Mark Rutte in March, Xi said that “no force can stop China’s scientific and technological development.”

The Netherlands is home to ASML, the world’s sole manufacturer of extreme ultraviolet lithography machines needed to make advanced semiconductors. The company said in January that it had been prohibited by the Dutch government from shipping some of its lithography machines to China.

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