China to ramp up support of local chip sector

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Semiconductor industry growth in 2020 report.

The Chinese government intends to launch a comprehensive initiative to support its domestic semiconductor industry, reports Bloomberg. The new program will be detailed during an economic summit for national government officials next month.

Beijing’s development plan follows its announcement of a $1.4 trillion technology-centric economic revival package.

China’s Semiconductor Support Strategy

Bloomberg states that China’s new initiative will provide the Sino chip sector with increased educational, research, and financial support. Though the publication did not offer any hard numbers, it reported the project would run through 2025. Insiders told the website that China’s development efforts are focused on making “third-generation” semiconductors using raw materials like silicon carbide and gallium nitride.

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China reportedly created its new program to address the country’s pressing need for electronic components independence.

At present, the nation spends over $300 billion a year to import state-of-the-art electronic components from other countries. As the United States leads the world in the development of integrated circuits (ICs), most of China’s money goes to American chipmakers, software designers, and equipment manufacturers. However, that paradigm has become problematic amid mounting trade tensions between the two superpowers.

Off to the Races

Similar announcements from other nations will likely follow the unveiling of China’s new infrastructure improvement program.

The New York Times noted the Asian country’s earlier declarations regarding the growth of its electronic components sector prompted responses across the globe. The newspaper stated Germany, Ireland, Israel, and South Korea had devoted resources to improve their local chip-making segments.

In June, Taiwan unveiled the plan to attract IC companies to the island with $334 million in subsidies.

Days after the Taiwanese government made its announcement, New Delhi revealed its $6.6 billion domestic semiconductor production incentive plan. The Indian government hopes to build a $1 trillion digital economy within the country by 2025.

The United States has also taken steps to maintain its global technological leadership. This past summer, U.S. lawmakers introduced a bill earmarking $25 billion to support the semiconductor industry. In addition, a different proposal that would allocate $22.5 billion to aid the American IC sector is under Congressional review.

With billions of dollars flowing into the global electronic component industry, the rate of chip development will accelerate. The recent trend of international competitiveness will also lower development costs, which will make new technologies more financially accessible. As a result, rapid and widespread digital transformation will make the world a more connected and convenient place to live.

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