China's Chip Funding Dives as US Tech War Bites

China's semiconductor industry experienced a sharp decline in funding during the first eleven months of 2024, with investment deals and funding amounts falling by more than a third compared to the previous year, as reported by the South China Morning Post. The decline is attributed to US restrictions on advanced chips and concerns about overcapacity in older chip technologies.

The industry saw 677 investment deals in the first eleven months of 2024, representing a 35.9% year-on-year decrease. Total funding also fell by 32.4% over the same period. These figures are based on data from JW Insights, a local consultancy and research firm.

Despite the overall decline, some significant funding rounds were still announced. The largest was a 10.8 billion yuan (US$1.48 billion) investment in ChangXin Memory Technologies (CXMT), a developer of dynamic random access memory (DRAM) chips. Investors included GigaDevice, Hefei Industry Investment Group, and several major Chinese banks.

Unisoc, a mobile chip specialist, secured the next largest funding amount, raising 6 billion yuan from state-owned entities in anticipation of a potential initial public offering (IPO) in 2025.

JW Insights also notes that government-backed funding is increasingly dominant in China's semiconductor investment landscape. This trend is likely driven by the escalating US-China tech war, where Washington has imposed restrictions on Beijing's access to advanced US technologies due to concerns about their potential military applications.