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China's new investments for semiconductors.

 China has released a top chip investor after an eight-month deten­tion as the coun­try battles to bol­ster its semi­con­ductor industry in the face of Wash­ing­ton’s con­tain­ment efforts.

Chen Datong, head of Yuanhe Puhua Invest­ment Man­age­ment, also known as Hua Cap­ital, was released this month as Beijing seeks help from chip experts to nav­ig­ate tough west­ern sanc­tions, accord­ing to two people with dir­ect know­ledge of the mat­ter.

China
Hua Cap­ital, an Rmb10bn invest­ment firm that has seeded more than 150 Chinese chip com­pan­ies, was at the fore­front of Beijing’s efforts to boost its domestic chip pro­duc­tion.

Chen was detained in August last year amid a storm of invest­ig­a­tions into China’s chip industry, with offi­cials irate that tens of bil­lions of dol­lars poured into end­ing China’s reli­ance on for­eign semi­con­duct­ors had failed to seed any big break­throughs.

The coun­try’s top anti-cor­rup­tion agency launched mul­tiple probes last year into groups tied to the $47bn National Integ­rated Cir­cuit Industry Invest­ment Fund, China’s premier semi­con­ductor invest­ment vehicle known as the «Big Fund», detain­ing more than a dozen top chip exec­ut­ives and offi­cials. Chinese offi­cials are keen to ensure the probes do not derail the industry entirely. Before leav­ing his post this month, vice-premier Liu He, the coun­try’s eco­nomic tsar, sur­veyed semi­con­ductor com­pan­ies in Beijing and hin­ted China would allow entre­pren­eurs and top tal­ent suf­fi­cient space and sup­port.

Chen fun­nelled more than 80 per cent of Hua Cap­ital’s invest­ment into loc­at­ing and incub­at­ing domestic altern­at­ives to for­eign tech­no­logy, a vital piece of China’s effort to build its local chip industry under pres­sure from Wash­ing­ton’s tight­en­ing export con­trols. «China is full of gov­ern­ment funds that want to invest in semi­con­duct­ors, but there is a lack of pro­fes­sional investors like Chen, » said tech-focused private equity exec­ut­ive close to the 68-year-old.

Chen first found suc­cess in Cali­for­nia after con­duct­ing research at the Uni­versity of Illinois and Stan­ford. An employee at Hua Cap­ital said Chen’s release «was excellent news» but noted he was unlikely to be return­ing to the office soon. «It is too early to dis­cuss his future semi­con­ductor invest­ment plans,» the per­son said.

The probes into the Big Fund also ensnared exec­ut­ives from Tsinghua Unig­roup, a failed state-invest­ment group also backed by the Big Fund. Its chair Zhao Weiguo was handed over to pro­sec­utors on Monday after a lengthy deten­tion by the National Com­mis­sion of Super­vi­sion. The NCS did not respond to a request for com­ment.

Chen’s deten­tion spread fear across China’s chip industry, par­tic­u­larly for those work­ing in the coun­try with US cit­izen­ship, who under new US rules, were being forced to decide between their Amer­ican pass­ports or work­ing at Chinese chip com­pan­ies.

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