China plans to become self-sufficient in semiconductor manufacturing by making a huge semiconductor bid of more than 1 trillion yuan ( $143 billion) as a support package for its semiconductor manufacturing industries to counter the US, said the sources.
Beijing wants to be self-reliant on advanced chip systems, to make it possible it plans to provide subsidies and incentives for its local manufacturers to increase production and supply chain, investment in research and advanced technological activities.
The decision came after the latest regulations passed by the US which specifically intend to curb China by limiting its exports and access to advanced AI power chips.
Though China is the hub for its natural resources and rare earth metals, most of the mineral enrichment used for semiconductor processing is done in china. Also, it’s one of the major industrial hubs for semiconductor manufacturing.
However, the Chinese manufacturers are in a backward step when compared to US Semiconductor processing and chip-making technologies.
The latest package is ahead to be implemented from the next fiscal quarter to overcome the gap and help China to counter the US.
The US aid for Semiconductor Industry:
The Joe Biden administration aimed at improving its production of semiconductor manufacturing in the US ahead of China and passed a bill providing $ 280 billion for the industry. The bill also curbs Chinese companies from accessing its advanced chip technologies, tools, research and development support as part of its political agenda, the sources say.
The bill becomes a hurdle for China in terms of growth as the chips play a major role in the supply of military appliances, and computing services and disrupts the global supply chain.
A dispute has been filed by China against the bill by the US at WTO ( World Trade Organization) as a violation of International trade rules, an organization which ensures a free and smooth supply of trade said Beijing’s Ministry of Commerce and Trade.
In response to that, the US Commerce Ministry stated that actions have been taken in the wake to curb the misuse of sensitive information by Chinese officials.
After the wake of the technology boom in the nineteenth century, semiconductors played a major role in development which changed the shape of global trade, there came many advancements and many countries have become the technology hub spots.
Growth of Semiconductor Industry:
Semiconductors are a part of technology the countries leading in that have some importance in global trade, countries like China, Japan, South Korea, Taiwan and the United States are currently acting as the leading producers.
The World Semiconductor Trade Statistics (WSTS) stated that the global semiconductor market may reflect a growth of 8.8 per cent in 2022, to US$ 601 billion.
The geopolitical issues have raged between the US and China after the wake of the Ukraine and Russia War. The recent US bill plays an important role that makes the country self-sufficient in semiconductor manufacturing.
China becomes the leading producer of semiconductors, fulfilling a quarter of the world’s needs.
The US as a world leader in technology wants to expand its supply chain and investments in Semiconductor industry at home and at allied countries started to boost the industry with allocating funds.