China's innovation and technology hub, Shenzhen in South China's Guangdong Province, has established a 5 billion yuan ($694 million) investment fund for the semiconductor and integrated circuit industry, aimed at boosting regional development in this cutting-edge field.

The move reflects the city's commitment to fostering the self-reliance of the semiconductor industry through expanded research and development, said an industry veteran, noting the fund also addresses the city's need to accelerate industry upgrades.

Shenzhen's semiconductor and integrated circuit industry investment fund completed its business registration, with a total scale of 5 billion yuan, and it is managed by Shenzhen Capital Group (SCGC), with SCGC and Shenzhen Major Industrial Investment Group serving as general partners, the Securities Times reported on May 13.

The fund primarily targets key semiconductor and integrated circuit projects in Shenzhen, including leading enterprises in specialized segments and other initiatives that significantly contribute to strengthening the city's semiconductor industry chain.

Its focus is on building, reinforcing and expanding the industrial chain around Shenzhen's major integrated circuit manufacturing clusters, with the goal of establishing a localized supply chain that is autonomous, efficient and well supported.

Shenzhen has ramped up efforts to boost its semiconductor industry through investment funding, following a plan announced last year. At a press conference held by the Shenzhen Municipal Government last October, an official from the city's Development and Reform Commission said that Shenzhen was accelerating the establishment of a 10 billion yuan-level municipal investment fund for the semiconductor and integrated circuit industry.

As of October 2024, a total of 38 integrated circuit-related funds had been established with support from municipal guidance funds and leveraged private capital, reaching a combined scale of more than 100 billion yuan, according to the government official.

Shenzhen is not alone in establishing a fund for the semiconductor industry. Cities such as Shanghai, Wuhan in Central China's Hubei Province and Wuxi in East China's Jiangsu Province have set up their own semiconductor investment funds as the nation strengthens support for the advanced manufacturing industry.

The establishment of a semiconductor investment fund in Shenzhen comes at a pivotal and opportune time, said Ma Jihua, a senior industry analyst.

"Chip research and manufacturing require significant financial investment. By combining government support with private capital, the fund can alleviate the financial pressure on enterprises, enabling them to focus more on core technology R&D and drive the industry toward high-quality development," Ma said.

Ma emphasized the pressing need for Shenzhen to upgrade and transform its manufacturing sector, pointing out that many traditional manufacturing facilities have already moved to Dongguan or further inland, intensifying pressure on Shenzhen to restructure its industrial base.

In this context, Ma noted, the city must capitalize on its strong talent pool and accelerate the growth of its local semiconductor industry, thereby advancing domestic substitution.