The third phase of National Integrated Circuit Industry Investment Fund has amassed 344 billion yuan ($47.5 billion) from the central government and various state-owned banks and enterprises, including Industrial & Commercial Bank of China Ltd., according to Tianyancha, an online platform that aggregates official company registration information. The fund was incorporated on May 24.

The latest investment vehicle, known as Big Fund III, underscores a renewed push from Xi Jinping’s government to build its own semiconductor industry as tensions with the US escalate. The Biden administration has imposed sweeping restrictions on China’s ability to buy advanced chips and chipmaking equipment, and is now urging allies — including the Netherlands, Germany, South Korea and Japan — to further tighten curbs on China and plug holes in existing export controls.

Shares of China’s major chip stocks jumped on Monday. Semiconductor Manufacturing International Corp., the largest chipmaker in China, rose as much as 8.1% in Hong Kong, while Hua Hong Semiconductor Ltd., a smaller competitor, climbed more than 10%.

The largest shareholder in the latest fund is China’s Ministry of Finance, and investment firms owned by local governments in Shenzhen and Beijing also contributed. The Shenzhen government has been supporting several chipmaking plants in South China’s Guangdong province in an attempt to free Huawei Technologies Co. from years of US sanctions that cut it off from a great number of imported semiconductor components.

Superpowers led by the US and European Union have funneled nearly $81 billion toward cranking out the next generation of semiconductors, escalating a global showdown with China for chip supremacy. The Biden administration’s 2022 Chips and Science Act includes $39 billion in grants for chipmakers, as well as $75 billion in loans and guarantees. 

China has long had a more proactive industrial policy, including an ambitious program called Made in China 2025 that sketched out development goals in biotech, electric vehicles and semiconductors. At least since 2015 when that program was unveiled, China has been a leading supporter of the sector, using state capital to fund local chipmakers such as SMIC.

The national chip fund was inaugurated about a decade ago with roughly 100 billion yuan in investable capital. Xi, soon after becoming the Chinese president, started a massive overhaul of the country’s manufacturing industry, aiming for sophisticated technologies from robotics to advanced chipmaking.

China more than doubled the size of the Big Fund II in 2019 as the race against the US for tech supremacy intensified during the Trump administration. The capital was used to fund some of the country’s most promising chip projects from SMIC’s new factories to chipmaking machine manufacturer Advanced Micro-Fabrication Equipment Inc. China.

But Beijing’s generous investments haven’t always paid off. China’s top leadership was frustrated with a years-long failure to develop semiconductors that could replace US circuitry. In addition, the former boss of the Big Fund was removed and investigated for corruption.

The Biden administration has taken unprecedented steps to slow China’s technological progress, arguing such measures are necessary for national security. Over the last two years, the US has cut off China’s ability to buy the most advanced chips from Nvidia Corp., which are used to train artificial-intelligence models, as well as the most sophisticated chipmaking machines from the likes of ASML Holding NV and Applied Materials Inc.

China has responded by ratcheting up its investments in less-advanced chipmaking capabilities, what some people in the industry refer to as legacy chips. China is now building a network of chip companies around its national champion Huawei for technological breakthroughs in advanced chip development and manufacturing. The newly created Big Fund III may provide funding for those projects.