On December 11th, Financial Association reported (Reporter Xia Shuyuan) that the Shanghai Integrated Circuit Industry Investment Fund, exclusively focusing on chips, has once again received support from insurance capital.

On December 11th, according to news from Zhongbao Investment, the company, along with New China Life Insurance and Zhonghui Life Insurance, established the Zhijixin Fund, investing over 2 billion yuan to successfully acquire the shares of the Shanghai Integrated Circuit Industry Investment Fund held by the Shanghai International Group.

It is reported that as early as 2021, Zhongbao Investment established the Zhongbao Investment Qixin Fund, acquiring shares worth 1.2 billion yuan in the Shanghai Integrated Circuit Industry Investment Fund, initiating a business model that guides insurance capital and other funds to support national core strategic development through S Fund methods. In 2023, China Life Insurance established the Hu Fa No. 1 Private Equity Investment Plan, using S shares to acquire equity in the Shanghai Integrated Circuit Industry Investment Fund held by state-owned enterprises in Shanghai, with an investment scale of approximately 11.8 billion yuan.

Industry insiders say that due to risk considerations, there have not been many cases of insurance funds participating in integrated circuit industry investments, which have mainly been single projects with small proportions and higher exit expectations. In the past two years, local governments and insurance institutions have been exploring S share investment methods, turning integrated circuit industry investments from a "marathon" into a "relay race", which will help state-owned assets to be revitalized and reinvested, continually implementing the national Semiconductor self-controllable strategy.

Zhongbao Investment, together with New China Life Insurance and others, has established a fund, investing over 2 billion to acquire shares in the Shanghai Integrated Circuit Fund.

The Zhijixin Fund was established by three insurance institutions: Zhongbao Investment, New China Life Insurance, and Zhonghui Life Insurance, officially named Zhongbao Investment Zhijixin (Jiaxing) Private Equity Investment Partnership (Limited Partnership).

Among them, New China Life Insurance has committed to invest 1 billion yuan, accounting for 47.29% of the total; Zhonghui Life Insurance has committed to invest 0.8 billion yuan, accounting for 37.83%; and Zhongbao Investment has committed to invest 0.315 billion yuan, accounting for 14.88%.

It is reported that the Zhijix芯 Fund has successfully acquired shares in the Shanghai Integrated Circuit Industry Investment Fund held by Shanghai International Group through the S-share investment method.

The so-called 'S-share investment method' usually refers to the trading of fund shares in the secondary market of private equity, also known as S Fund (Secondary Fund) investment activities.

Zhou Jin, a partner at PwC China Financial Services Consulting, told reporters from CaiLianShe that S Funds play an important role in the Capital Markets, transforming the investment 'marathon' into a 'relay race' by acquiring fund shares from other investors or acquiring equity in enterprises.

'It promotes the circulation of fund shares, accelerates investment recovery, and simultaneously attracts diverse capital investment, providing ongoing support for technology-based enterprises, achieving comprehensive support for technological innovation and industrial development,' Zhou Jin stated.

Industry insiders believe that the successful acquisition of shares in the Shanghai Integrated Circuit Industry Investment Fund by the Zhijix芯 Fund also signifies that this industry fund, which has been established for 8 years, will continue to provide 'ammunition' for insurance capital, further supporting the development of the Shanghai integrated circuit industry.

Public information shows that the first phase of the Shanghai Integrated Circuit Industry Investment Fund was established in 2016, and a second phase fund was set up in 2020. Currently, the two funds have collectively invested in 16 enterprises. Semiconductor industry leaders like Semiconductor Manufacturing International Corporation, Ultra Silicon Semiconductor, UNISOC, and Jita Semiconductor all have its backing. 'It can be said that Shanghai has become one of China's integrated circuit industry centers, and the contributions of these two funds cannot be understated,' said industry insiders.

Local governments are exploring S-share investments with insurance capital institutions, continuously increasing investments in the semiconductor industry.

The integrated circuit industry is hailed as the 'grain of modern industry' and is an important indicator of the level and strength of a country's or region's modern manufacturing capabilities.

However, the integrated circuit industry has high barriers to entry and is a typical capital and technology-intensive sector. To carve out a path of independent innovation in this field requires long-term funding investment and the support of patient capital.

Large-scale and long-cycle insurance funds are undoubtedly ideal sources of support for the development of the integrated circuit industry. Empowering the real economy and aiding the development of new productive forces is also a rightful responsibility of the insurance sector.

It is worth noting that insurance funds also have characteristics of rigid liabilities and a pursuit of stable investments, whereas integrated circuits have distinct characteristics of high precision technology, high investment, and high risk. Therefore, there are significant contradictions between supply and demand.

A relevant person in charge at China Insurance Investment stated: "We have found the resonance point between the application of insurance funds and technological innovation, as well as regional development, through innovative methods, supporting the development of China's integrated circuit industry while achieving reasonable financial returns."

It is reported that as early as 2021, China Insurance Investment established Zhongbao Touqi Chip (Jiaxing) Integrated Circuit Industry Investment Co., Ltd. (hereinafter referred to as the "Zhongbao Touqi Chip Fund"), undertaking a portion of 1.2 billion yuan from the Shanghai Integrated Circuit Fund, initiating a business model to guide insurance capital and other funds in supporting national core strategic development in the form of S funds.

In 2023, China Life Insurance established the "China Life Insurance - Hufa No. 1 Private Equity Investment Plan," obtaining shares in the Shanghai Integrated Circuit Industry Investment Fund Co., Ltd. held by state-owned enterprises in Shanghai through S share investment, with an investment scale of approximately 11.8 billion yuan.

China Insurance Investment stated that based on prior experience, the Zhijichip Fund will further leverage the allocation advantages of insurance capital in the S fund sector. In the future, China Insurance Investment will fulfill its proactive management responsibilities and increase efforts to explore more investment opportunities in the S fund sector for the insurance industry.