Chinese Government Invests Billions in Semiconductor Industry Subsidies

The Chinese government has reportedly provided substantial subsidies, totaling CNY12.1 billion (US$1.75 billion), to approximately 190 listed semiconductor companies within its territory. This move is part of China’s broader strategy to enhance its technological independence and reduce reliance on the Western world amidst geopolitical tensions.

China has been actively investing in sectors critical to its technological advancement, aiming to close the gap with, and potentially surpass, its global counterparts. While the $1.75 billion in subsidies may seem relatively modest compared to other large-scale investment initiatives, such as the US CHIPS Act or the EU’s pledges, it represents one aspect of China’s multifaceted approach.

China’s efforts to bolster its semiconductor industry extend beyond financial support. The country has also been focused on strengthening its research and development capabilities. As an indication of progress, China has surpassed the United States in the number of papers submitted to prestigious conferences such as the International Solid-State Circuits Conference (ISSCC). This signifies China’s drive to establish its own R&D capabilities, which would contribute to reducing the risk of future technological sanctions.

Investments in education have played a significant role in China’s pursuit of technological independence. Considerable funding, amounting to billions of dollars, has been allocated to education, enabling the development of a skilled workforce capable of driving technological innovation.

China’s dominant position as a global hub for rare earth metals extraction, processing, and trade further contributes to its technological resilience. These metals are essential components in semiconductors, and China’s control over their supply provides the country with leverage in mitigating the risk of dependence on other nations. By potentially adjusting the availability of these critical materials in response to sanctions, China can exert influence in the global technological landscape.

It is important to note that the reported $1.75 billion in subsidies is just one facet of China’s broader investments in its semiconductor industry. The country’s comprehensive strategy encompasses various funding channels and initiatives. The ultimate outcome of China’s endeavors to catch up with global technological leaders remains uncertain and subject to future developments.