(Bloomberg) -- China is seeking to raise a $40 billion fund to bankroll investments in domestic chipmaking and research, Reuters reported, citing unidentified people familiar with the matter.

The state-backed China Integrated Circuit Industry Investment Fund is establishing its third and largest investment pool of about 300 billion yuan ($41.1 billion), Reuters reported. The country’s finance ministry may contribute 60 billion yuan to the fund, which won approval to operate in recent months, Reuters cited the people as saying. The process may take time and it’s unclear who the potential investors were or when it might launch, it added.

Known as the Big Fund locally, the firm is one of the main vehicles behind Beijing’s ambitions to build a self-sufficient chip sector that can reduce the country’s reliance on American technology. But in 2022, regulators launched probes into alleged graft involving the fund and affiliates, as officials considered alternatives to costly subsidies that spawned several failed chip firms and had borne little fruit.

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The fund has backed some of China’s biggest chip enterprises, including Semiconductor Manufacturing International Corp. and Yangtze Memory Technologies Co. Last week, Chinese state media hailed the unheralded launch of a smartphone by Huawei Technologies Co., which was shown to contain an advanced chip made by SMIC, as a sign the country was making progress in efforts to replace American technology.

Shares in chip-related firms were mostly down Tuesday in the wake of weak economic data. Despite local media enthusiasm, it remains unclear how Chinese players can circumvent strict US curbs, which seek to bar sector leaders from American software and circuitry and access to advanced processes over the long run.

“It is extremely unlikely that China can catch up on leading-edge technology that it is currently restricted from accessing, no matter how much money they invest, because the supply chain is long, highly integrated, specialized, and continually improving,” said Vey-Sern Ling, a managing director at Union Bancaire Privee. “It is an uphill struggle just to stay five years behind.”

Read more: Huawei’s Marquee Phone Launch Spurs Hunt for China Tech Winners

--With assistance from Gao Yuan.

(Updates with share action and commentary from the fifth paragraph)

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