China’s central government is tipped to be a minor investor in a third chip manufacturing funding initiative, with Bloomberg reporting the majority of the capital is expected to be raised by local governments, their investment arms and state-owned enterprises.

The news agency, citing local sources, stated support for the latest funding round by the China Integrated Circuit Industry Investment Fund is expected to be larger than the CNY200 billion ($27.8 billion) second fund. Major investors include the governments of Shanghai and other cities, China Chengtong Holdings Group and State Development and Investment Corp.

China has not released an official announcement on the fund.

Increasing sanctions led by the US to restrict China’s access to advanced chips and chipmaking equipment have spurred the country to boost domestic capabilities, with the aim of cutting its dependence on imports.

In a recent development, the US is considering adding several Chinese tech companies, including memory chipmaker Changxin Memory Technologies, to the Department of Commerce’s entity list, which restricts access to US technologies, Bloomberg wrote.

Over the past year, China’s central government has been slow to introduce financial measures to reboot growth, after the easing of Covid-19 (coronavirus) restrictions back in December 2022 failed to spur consumer spending and corporate investment, with GDP growth slowing in 2023 to a three-decade low.

In September 2023, Reuters reported the government was preparing to launch a CNY300 billion fund to drive domestic chip production.