Despite billions of investments, China has not been able to overcome its dependence on Western microcircuits
China’s government is angry about failures in the semiconductor industry. Tens of billions of dollars invested over the past decade have not produced a significant technological breakthrough, and Washington continues to successfully curb Beijing’s technological ambitions. Government displeasure has sparked anti-corruption investigations in an industry accustomed to support, reports Bloomberg.
Most of the scrutiny affected the Integrated Circuit Industry Fund, known as the Big Fund, which was the main intermediary for transferring funds to manufacturers. On Tuesday, the country’s top anti-corruption agency opened an investigation against three more fund managers in addition to Minister Xiao Yaqing.
“If you’re going to be putting tens of billions of dollars in an industry, regardless of whether it’s a high technology one or just like building trains and airports, you’re going to have illicit dealings going on,” says Jordan Schneider, an analyst and host of the China Talk podcast.
The head of the Great Fund, who previously warned that it was “unrealistic” to cut corners in the production of microcircuits, came under investigation. The fund mostly operated behind closed doors and kept investment standards as far away from the public as possible, which analysts said hindered accountability.
Investigations started against the background of decreasing exports of chip manufacturing equipment from the US to China. States are also encouraging allied countries to join the blockade. In particular, the supply of equipment for the production of chips may be reduced by the Dutch ASML Holding NV and the Japanese Nikon Corp.
This year, Chinese government agencies began revising plans for strategically important industries in the event of increased US sanctions. When executives reviewed the semiconductor industry’s report last month, it became clear that the industry’s success may have been overstated, and that many investments had not yielded results.