Author(s)

Jianbo Wang, Jing Kang

Corresponding Author

Jianbo Wang

Abstract

Amid the accelerating global informationization and technological advancements, the integrated circuit (IC) industry has emerged as a cornerstone of national scientific and technological strength, as well as economic growth. Many countries are increasingly enhancing their investments in the IC sector through policy measures and financial support, particularly in response to intensifying international competition and technological blockades. For China, where the IC industry remains relatively underdeveloped, this global landscape presents significant challenges. In response, the National Integrated Circuit Industry Investment Fund, established in 2014 and 2019 (first and second phases), demonstrates the government’s strategic market-driven initiatives aimed at bolstering the industry. The fund seeks to elevate the value of IC companies and advance domestic technological capabilities. This study examines the development trajectory of China's IC industry and the impact of the National IC Fund on firm value. Drawing on data from 2011 to 2023, with a focus on A-share-listed IC firms, the study employs a difference-in-differences (DiD) methodology to rigorously assess the fund’s effects. The results indicate that the fund has successfully stimulated enterprise investment, alleviated financial constraints, optimized resource allocation, and facilitated industrial upgrading. Moreover, the mediating effects of social capital and government subsidies further substantiate the conclusion that the fund has positively influenced firm value. For instance, Northern Huachuang, among other companies, witnessed stock price increases exceeding 700% by the end of Q1 2024.

Keywords

National investment funds; institutional holdings; difference-in-differences; industrial upgrading