90% of venture capital investments in Chinese companies come from the microchip sector

In 2023, 90% of global venture capital investments were attracted by Chinese chipmakers, writes the South China Morning Post. The total amount is $22.2 billion, more than double the figure of $9.5 billion in 2022. And this against the background of a general decline in investment in the Chinese economy due to the tense geopolitical situation.

Half of the venture capital investment in semiconductors came from three “mega deals” between the city government and Sino IC Capital, which manages the assets of the state-backed China Integrated Circuit Industry Investment Fund (often referred to locally as the “big fund”).

According to Preqin, the 39 billion yuan (5.4 billion U.S. dollars) raised by Changxin Xinqiao Memory Technologies Corporation in October last year, the 4 billion U.S. dollars raised by Hua Hong Grace Semiconductor in January and the 3.2 billion U.S. dollars raised by Hua Hong Chengdu in December should be considered “mega deals.”

The pace of chip investment slowed in the first half of 2024, with $1.6 billion in 128 deals, but the country still accounted for four of the world’s top 10 chip industry investments during that period.

The second most popular industry to invest in China is artificial intelligence development. Among the world’s top 10 venture capital deals between January and June 2024, two were closed in China.

Electric vehicle maker IM Motors raised $1.1 billion in March. Generative AI startup Moonshot AI raised $1 billion in February. Both companies are backed by Alibaba Group Holding.

In total, AI companies in China raised $5.6 billion in the first half of 2024, roughly half of the $11.7 billion the sector raised in all of last year.