Chinese government funds semiconductor manufacturing
Growing tensions with the US are forcing China to strengthen several sectors that will reduce its dependence on imports. One such sector is semiconductor manufacturing, which is under US sanctions. The Chinese government plans to allocate US$1.9 billion to stimulate local companies.
The funds will be used to develop China’s semiconductor market leader Yangtze Memory. The funding will be channelled through a state fund focusing on industrial investment and the integrated circuits sector. Experts believe that with this massive infusion of capital, the government wants to support the semiconductor industry, which has been difficult due to an export ban imposed by the United States and several other countries.
In February 2022, China’s ruling party studied the local market. According to its results, the country needs to accelerate scientific developments that will enable the state to maintain its leading position worldwide and reduce supplies from foreign manufacturers. The study paid particular attention to the micro-technology sector, which is increasingly in demand. Support from the authorities, both financially and in coordination, is important for early progress.The Chinese Academy of Sciences has presented its plan for the semiconductor industry, which will remain sustainable and demonstrate new developments regardless of restrictions and sanctions.
As far as US policy is concerned, it is primarily aimed at containing global geopolitical threats, including from China. To prevent the conflict with Taiwan from escalating, the US government has tightened control over the use of its advanced technologies in the PRC. For example, Washington has banned the use of its own innovative solutions for the Chinese defence industry. In March this year, the White House added 37 more Chinese business representatives to its sanctions list, including Inspur. The latter produces equipment for servers and data centres. In October 2022, US authorities restricted the ability of their companies to sell semiconductor products to China. Manufacturers of equipment for the production of chips also fell under the ban. A licence is now required for a Chinese company to buy products from the US. In December 2022, a number of large Chinese corporations were added to the blacklist, including China’s semiconductor market leader Yangtze Memory. As a result, the company has to look for new sectors to supply products. In addition, it needs to speed up the development of next-generation chips to remain competitive on the world stage. The company has secured financial support from the Chinese government to do this.