China invests $29 billion to beat U.S. semiconductors

• China is biggest market, imports 95% of its high-end chips
• Securing digital supply chains is growing global trend

• China is biggest market, imports 95% of its high-end chips
• Securing digital supply chains is growing global trend

China introduced a $29 billion state-backed fund to build its own domestic semiconductor industry. It is both a reaction to ongoing tension with the U.S. as well as an indicator of rising digital sovereignty.

China is the world’s biggest chip market, importing about $200 billion annually, and that’s only set to grow. Several policies entwine the country’s overall growth with strategic technologies such as AI, cloud computing, and industrial Internet of Things. Semiconductors are a feedstock for all of these, making them key to China’s ambitions.

The fund impacts chip exporters such as South Korea and Japan, but none more than American companies, including Intel, Qualcomm, and Micron, make up 30% of the global chip market and many derive large parts of their revenue from China.

Digital sovereignty is a growing trend this year, reflected in U.S. sanctions on Huawei and the EU’s regional cloud initiative. While this may secure supply chains, it will also fragment future technologies and therefore slow overall development.