Chinese corporations are backing domestic semiconductor startups at a rate unmatched by any other country including the US.
Chinese semiconductor startups have received the highest number of corporate-backed investments over the past two years, indicating China’s determination to dominate a sector key to the build-out of AI.
Since April 2024, corporates have backed more than 100 fundraising rounds for Chinese chip companies, according to Global Corporate Venturing data. The Asian country comes top of the leader board for the number of investments in its startup chip sector.
The US is in second place, with the number of corporate-backed investments in domestic startups totaling 65 over the same period.
It is less clear which country’s startup chip sector has received the most investment dollars because of the large number of deals in Chinese startups where the value was not disclosed.
For all funding rounds since April 2024 where the value was disclosed, US chip companies have received the most money.
The US has tried to support its own domestic chip sector through the Chips and Science Act, passed in 2022, which allocated $52bn to boost US semiconductor manufacturing.
The legislation was designed to reduce the US’s reliance on foreign semiconductor supply chains, particularly from China. But it is still an open question which country will lead investments in computer chips. Taiwan remains the largest manufacturer of semiconductors, representing more than 90% of global supply.
Large corporate-backed deals for chip companies over the past couple of months include the $400m round for US startup SFive, which received investment from US GPU maker Nvidia and Prosperity7 Ventures, an investment arm of Saudi energy company Aramco.
Recent Chinese startup funding deals include the $145m series B for chipmaker Cix Technology, which received investment from Chinese technology group Lenovo, and the $72.5m funding round for Isabers, a Chinese maker of high-precision semiconductor bonding equipment, which is backed by Beijing Automotive Industry Holding and Advanced Micro-Fabrication Equipment, a Chinese chipmaker.
Most of the corporate investors in Chinese chip startups are Chinese corporates such as car company Geely, Lenovo, fintech company Ant and consumer electronics company Changhong.
The rate of corporate VC investment in semiconductor startups has increased over the past 12 months compared with the previous year as the rapid growth of AI requires innovation in chip manufacturing to meet the computing demand of artificial intelligence applications.
At the same time, the cost of building semiconductors has declined, which is likely to result in the continued growth of investment in the sector.
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