China backs domestic chipmakers as 'one team' in strategic coordination, while South Korean firms pursue independent paths.
China’s coordinated public financing and infrastructure support stand in sharp contrast to the heavier investment burden currently facing Samsung Electronics and SK hynix.
China’s semiconductor push relies not only on technology and production capacity but also on a highly coordinated “one-team” system. By aligning central and local governments, state-owned financial institutions, and private companies, Beijing grants its chipmakers a distinct competitive edge. In contrast, South Korean firms are largely left to navigate these challenges alone.
At the center of this strategy is the National Integrated Circuit Industry Investment Fund, widely known as the “Big Fund.” Established as a cornerstone of China’s semiconductor ambitions, the fund has raised 138.7 billion yuan ($20.7 billion) for its first phase in 2014, 204 billion yuan for its second in 2019, and 344 billion yuan for its third in 2024. Across all three phases, the Big Fund totals 686.7 billion yuan—equivalent to more than 130 trillion won ($96.6 billion). Backed by China’s Ministry of Finance, state-owned enterprises, and major state-owned banks, the fund operates under a clear division of labor: the central government sets industrial strategy, financial institutions provide long-term capital, and local municipalities supply land, electricity, water, and other infrastructure. This model effectively distributes investment risk rather than leaving individual companies to bear it alone.
The fund’s capital has flowed to key players such as Semiconductor Manufacturing International Corporation (SMIC), China’s largest foundry by revenue, alongside Hua Hong Semiconductor and NAND flash memory manufacturer Yangtze Memory Technologies Corp. Another standout beneficiary is ChangXin Memory Technologies (CXMT), which rose to become the world’s fourth-largest dynamic random-access memory (DRAM) maker by market share in 2025, less than a decade after its 2016 founding. Its rapid ascent defies conventional market logic. Between 2023 and 2025, despite recording a combined net loss of 21.13 billion yuan, CXMT invested 185.2 billion yuan—roughly double its revenue over that period—into research and development and capital expenditures.
This aggressive investment strategy was fueled not only by the Big Fund but also by what officials term “patient capital” from the local government of Hefei, Anhui province. Patient capital describes long-term funding willing to absorb extended losses to allow companies time to achieve competitiveness. State-backed capital from Hefei initially covered approximately 80 percent of CXMT’s first DRAM project in 2016, catalyzing the city’s broader semiconductor ecosystem. Today, more than 500 integrated circuit-related firms operate within Hefei’s industrial clusters.
South Korea’s landscape stands in stark contrast. Companies like Samsung Electronics and SK hynix shoulder a disproportionate share of the financial burden, covering not only their own investments, employment costs, and technological development but also supporting suppliers and stimulating local job markets. While the South Korean government aims to mobilize 622 trillion won in private investment for a semiconductor cluster in southern Gyeonggi Province through 2047—and has allocated 17 trillion won in low-interest loans plus a 1.1 trillion won semiconductor ecosystem fund—the vast majority of that 622 trillion won will ultimately fall on corporate shoulders. Unlike China’s direct risk-sharing model, Seoul’s support leans heavily on loans and tax incentives.
Infrastructure development presents further hurdles. Supplying power and water to the planned national and general industrial complexes in Yongin, Gyeonggi Province, will require over 10 gigawatts of additional electricity and 1.108 million metric tons (1.22 million short tons) of water daily. However, resident opposition to new transmission lines and complex permitting processes have stalled progress, raising fears of operational delays. Industry critics argue that companies are being pressured to drive investment, generate employment, and bolster local economies while essential state-provided infrastructure lags behind.
As geopolitical competition in the semiconductor sector intensifies, industry leaders are urging expanded state backing. “Semiconductors are an industry where stopping investment inevitably means falling behind competitors in the next upcycle, so long-term policy financing and tax support must be provided to enable companies to maintain research and development, capital expenditures and orders for materials, parts and equipment even during downturns,” said Park Gun-su, vice chairman of the Korea Semiconductor Industry Association.
He emphasized that as China accelerates its catch-up through robust state intervention, “Korea needs a coordinated effort from the government, lawmakers, financial institutions and companies.”