China Pauses Investments in the Chip Sector and is Looking for an Alternative

The Chinese government has, at least temporarily, stopped its major investments in its own chip industry. The country is suffering from many corona infections, which puts pressure on the world’s second-largest economy and public finances.

According to sources from the Bloomberg news agency, talks are underway about definitively phasing out the substantial subsidies in the chip sector.

Some top officials involved in the talks are still considering sticking to stimulus measures with a value of around 137 billion euros. A lot of money has gone to the chip sector in recent years, which has led to people misusing the money. On the other hand, the investments have not yet brought Chinese chip companies close to the dominant US competitors.

The Chinese government subsidies have led to the United States imposing sanctions to protect its own chip sector. Developing its own chip companies is one of President Xi Jinping’s top priorities to continue competing with the US in economic and military terms. China previously pursued a similar stimulus policy in the manufacturing industry, where it proved successful.

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