A recent report has revealed that five American venture capitalist firms have invested over $1 billion in China's semiconductor production since 2001. The US government has deemed the Chinese semiconductor sector a security threat due to its rapid advancements.
The bipartisan House Select Committee on the Chinese Communist Party conducted the report, identifying GGV Capital, GSR Ventures, Qualcomm Ventures, Sequoia Capital and Walden International as the venture capital firms investing in this sector since 2001. As reported by The New York Times, these investments have benefited over 150 Chinese companies, including nearly $180 million that directly supported the Chinese military. In August 2023, the Biden administration prohibited U.S. venture capital and private equity from investing in China's quantum computing sector, artificial intelligence (AI), and advanced semiconductors.
According to a news release by Yahoo, approximately two-thirds of these firms' investments have been directed towards the development of Chinese AI companies. Post-sanction by the current administration, venture capitalist firms invested $35 million in the semiconductor industry. The House Select Committee recommended Congress limit investments in all Chinese entities subject to U.S. trade restrictions. The committee's report also revealed that between 2016 and 2023, Chinese semiconductor companies raised $8.7 billion.
Representative Mike Gallagher of Wisconsin, chairman of the committee said: "We all made this bet 20 years ago on China’s integration into the global economy, and it was logical." He added: "It just happened to have failed." Now Gallagher says there is "no excuse anymore". His comments refer to a time when the United States encouraged investments in China to foster economic engagement between both countries. However, given the escalating tensions between them and China's rapid advancements in AI, measures are being taken by the United States to decelerate growth within China's semiconductor sector.
