CHINA has formally created a US$29 billion State-backed fund to invest in the semiconductor industry, advancing its goal of reducing a dependency on foreign technology.

China is the world’s biggest chip importer and the long-awaited 204 billion yuan (US$28.9 billion) fund will fuel the nation’s efforts to forge its own semiconductor supply chain from chip design to manufacturing.

It will play a key role in steering overall strategy and investment in the integrated circuit sector, which includes processors and storage chips used in smartphones and data centers.

China’s effort to reduce its reliance on American chips is taking on greater urgency as the Trump administration adds more Chinese names to its export blacklist, cutting off the flow of chips to targeted companies from Huawei Technologies Co. to SenseTime Group Ltd.

The fund’s registered capital comes mainly from State organizations, according to company registration information, which was posted online Oct. 22.

China’s Ministry of Finance injected 22.5 billion yuan while an investment arm of China Development Bank poured in 22 billion yuan. It also attracted investment from local governments and State-owned enterprises including China Tobacco, the registration information shows.

China created its first State-led integrated circuit fund in 2014 to provide backing to major chip manufacturing initiatives, including Tsinghua Unigroup’s multibillion dollar memory chip plant in the central city of Wuhan.

China is trying to reduce the country’s reliance on semiconductor imports worth about US$200 billion annually. It fears such dependence undermines national security and hampers the development of a thriving technology sector. (SD-Agencies)