China is setting up a $27 billion chip fund. The move is aimed at boosting its technological prowess amid rising tech curbs from the U.S.
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According to Bloomberg, China’s National Integrated Circuit Industry Investment Fund is pooling resources from local governments in the country as well as state-owned enterprises. Notably, this will be the third such investment vehicle in the country.
China is the largest semiconductor market globally. The country is increasingly pushing for self-reliance and the use of domestically developed technologies, both in hardware and software. This has meant government officials being urged to ditch their iPhones for Chinese phones, sourcing hardware from Chinese manufacturers, and even the development of a China-made Operating System.
This has translated into top U.S. tech names seeing their sales and market share in China dwindle over the years. Micron’s (NASDAQ:MU) struggles in the country are a case in point.
Companies receiving funds from China’s mega funds are seen as having an endorsement from the country’s authorities. As per Bloomberg, the first fund holds a stake in 74 companies, and the second fund holds a stake in 48 chip names. Meanwhile, the U.S. is urging its allies to tighten their technology restrictions on China.
What Is the Best Chinese Stock to Buy Right Now?
The mega investments could boost the fortunes of names such as Huawei. Additionally, China aims to grow its GDP by about 5% this year. The ambitious target, coupled with China’s recent measures to stem a slide in its financial markets, could translate into major gains in Chinese stocks. Among top Chinese names, the TipRanks Stock Comparison tool indicates that the highest upside potential of 68.2% comes from Baidu (NASDAQ:BIDU).
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