Chinese Government Pumps $5 Billion Into Startup ChipMaker ChangXin To Achieve Elusive Semiconductor Self-Sufficiency Amid US Sanctions

Hefei-based Changxin Xinqiao, a fledgeling Chinese semiconductor firm, has raised $5.4 billion from government-backed investors as part of a sustained effort by Beijing to achieve semiconductor self-sufficiency and counter the crippling effect of U.S. sanctions.

Changxin secured 14.6 billion yuan from the state-backed China Integrated Circuit Industry Investment Fund Phase II in late October and further funding from two other investors affiliated with the local government, multiple Chinese media outlets reported.

Changxin Xinqiao is closely tied to China's top dynamic random access memory (DRAM) chipmaker, ChangXin Memory Technologies(CXMT), widely regarded as the country's best hope for cutting-edge chips,

CXMT is known to be working on producing its own high-bandwidth memory (HBM), the next generation of memory chips tailored for artificial intelligence (A.I.) processors. It aims to compete with leading memory players, including Micron Technology and Samsung Electronics.

The Chinese government is determined that the country must become self-sufficient in HBMs. Demand for HBM chips is set to grow by almost 60 per cent in 2023, as they are the preferred solution for overcoming memory transfer speed restrictions due to bandwidth limitations.

The Chinese government is pursuing a path to achieve self-sufficiency for its semiconductor industry but is reeling under the impact of the U.S. cutting access to its cutting-edge chip technologies.

Despite multiple setbacks, it has notched up a few notable successes. The most recent was the August release of a 5G phone by Huawei Technologies with silicon made by top Chinese chip maker Semiconductor Manufacturing International (SMIC).

SMIC is believed to have used existing equipment and applied its second-generation 7-nanometre process, known as the N+2 node, to manufacture the 5G-capable Kirin 9000s for Huawei.

Huawei's high-end flagship Mate 60 Pro is driven by a 'made-in-China' 5G capable chipset and was made despite strict U.S. trade sanctions.

In 2019, the U.S. restricted Huawei from buying advanced 5G chips and software from U.S. companies 2019, which dealt a heavy blow to its high-end smartphone business. The company could only sell limited batches of 5G models using stockpiled chips.