A state-backed Chinese IC firm is in talks with government agencies to raise from 150 to 200 billion yuan (US$31.5 billion) for a second fund vehicle to invest in domestic chip companies, as China continues its quest to become leader in the industry.

China Industry Investment Company hopes to deploy the capital in the second half of the year, according to a Bloomberg story, which cited people familiar with the matter.

Investment will target areas ranging from processor design and manufacturing to chip testing and packaging, potentially benefiting industry leaders such as Huawei and ZTE, as well as Tsinghua Group. Capital from the first fund went toward more than 20 listed companies, including ZTE and chipmaker Semiconductor Manufacturing International Corp, the report said.

Beijing has identified self-sufficiency in the field of semiconductors as a top priority, citing the national security implications of dependence on imported technology. China’s some US$200 billion in annual imports of semiconductors also holds back development of the country’s domestic technology industry.

In February, the municipal government of Chongqing, Tsinghua Unigroup and Sino IC Capital set up a US$16 billion IC investment firm, according to state-media, with expectations of investing up to US$100 billion in IC manufacturing over the next 10 years.