China’s semiconductor efforts are increasing as the country is attempting to weaken the bite of US technical sanctions by employing one of the oldest techniques in the book: throwing money at the problem. According to a South China Morning Post investigation, as reported by DigiTimes, the Chinese government spent CNY12.1 billion (US$1.75 billion) in subsidies to approximately 190 listed semiconductor companies in its territory.
China has been pouring billions of dollars into industries crucial to achieving technical independence from the enslaved Western world as it tries to catch up with – and then exceed – its adversary on the geopolitical stage.
Those $1.75 billion may appear insignificant in comparison to massive packages such as the US’ CHIPS Act (a $76 billion semiconductor industry injection with strict safeguards against any potential Chinese benefits); the EU’s $47 billion pledge; or even TSMC’s planned 11 billion investment in a German semiconductor factory.
China’s direct subsidies to the semiconductor industry are not the only moving piece on this board.
For example, China surpassed the United States in the number of papers submitted to the famous International Solid State Circuits Conference (ISSCC 2023) this year, a tentative step towards granting the country its own R&D capabilities that will allow it to circumvent potential future sanctions.
And these research accomplishments are clearly based on China’s investment in education, which saw $179 billion in financing for 2022 alone, with specific universities receiving $5 billion financial injections.
Another factor preventing China from becoming technologically enslaved is the country’s role as the global hub for the extraction, processing, and sale of rare earth metals – the components that go into semiconductors themselves. Every day, a balancing act is expected to take place in this area, as sanctions (and their severity) must account for the prospect of China shutting off (or at least tightening) the tap on these essential components.
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