China’s National Integrated Circuit Industry Investment Fund (aka Big Fund) has created the country’s largest investment vehicle with the sole aim of developing an autonomous supply chain that is impervious to U.S. restrictions.
Seeing that China has no access to silicon such as Nvidia Corp.’s H100 GPU after the US bans, Chinese President Xi decided that he must take initiatives to fill this strategically vital space.
So China is moving forward with the creation of the new Big Fund III whose goal is to ensure that the country has the resources to develop and manufacture AI-enabled semiconductors without outside help.
The initiatives that will be developed are a mixture of direct investment and tax breaks for those companies that will prove that they can bear the burden of such a strategic choice. Also, creating an autonomous supply chain is an even more complex business.
It requires investment in every area, from chip design software to alternative tools and machinery. A large number of these key components are manufactured or designed by the U.S. or its allies such as the Netherlands and Japan. China will have to find its way out of this maze.
And all this is happening while the AI thermometer is skyrocketing. The Chinese, however, are optimistic and believe that China and Asia more broadly will eventually close the gap with the U.S.
Certainly, international observers report, China does not currently have the computing resources of its geopolitical rival, but this, they point out, “will not be permanent.”