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Tuesday, December 5, 2023

China Plans $1.44 Billion Fund for Chip Development Following Vice-Premier Liu He’s Visit to IC Enterprises

BusinessChina Plans $1.44 Billion Fund for Chip Development Following Vice-Premier Liu He's Visit to IC Enterprises

The semiconductor market has become the stage for a growing rivalry between the world’s two largest economies, as the US government aims to curb China’s technological rise. However, experts caution that the use of political power in an industrial chain that is highly globalized and market-driven will eventually harm the interests of companies worldwide, including those in the United States.

Several multinational corporations have come out against US sanctions on China’s chip industry, recognizing the potential consequences for their own operations. Microsoft Co-Founder Bill Gates spoke out against the professed rationale behind such sanctions and said he does not believe the US will ever be successful in preventing China from having cutting-edge chips. He noted that if there were to be a trade war in the next decade, the US should not have warned China of the impending chip sanctions in advance.

Dutch chipmaking equipment maker ASML Holding CEO Peter Wennink echoed Gates’ sentiment, stating that US sanctions would eventually drive Beijing to successfully develop its own technology in advanced chipmaking machines. “If they cannot get those machines, they will develop them themselves,” he said.

China is the world’s largest chip market, consuming over half of the world’s semiconductors, which are then assembled into tech products to be re-exported or sold in the domestic market. In early March, Vice-Premier Liu He called for efforts to mobilize resources nationwide to promote the development of integrated circuits and offer real national treatment to foreign chip experts.

Liu’s visit to IC enterprises in Beijing was followed by announcements from companies like smartphone maker Xiaomi Corp and software and cloud company Kingsoft Corp, as well as other investors, of a plan to set up a $1.44 billion fund to develop chips and related technologies.

China is seeking a more flexible, supportive policy to better mobilize resources in the IC industry and avoid wasting time and resources while exploring ways to solve bottlenecks. With Liu’s visit giving strong confidence to companies and the entire chip market, it seems likely that a supportive policy for the semiconductor industry will soon be launched.

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