US chip subsidies ‘won’t hinder China’s rising tech capabilities’

Nation’s global market share surges despite crackdown

The US government’s reported plan to award $1.5 billion in subsidies to another US chipmaker showed Washington’s intensified efforts to lure more chipmakers to expand production within its borders, but such protectionist, anti-market moves are unlikely to reshape the global chip supply chain to reassert its dominance, experts said on Wednesday.

With subsidies under its so-called Chips and Science Act and export restrictions, the US is trying to crack down on China’s semiconductor industry. But it has so far failed to curb the rise of Chinese chip capabilities, as China’s self-reliance and global market share are both on a steady rise, experts noted.

The US Department of Commerce reached a preliminary agreement with US chipmaker GlobalFoundries to build a new semiconductor production facility in Malta, New York, and expand existing operations there and in Burlington, Vermont, Reuters reported on Tuesday.

Under the plan, the US government would provide $1.5 billion in subsidies, which would be accompanied by $1.6 billion in loans, and the funding is expected to generate $12.5 billion in overall potential investment, according to the report.

Ma Jihua, a veteran telecom observer, said that in order to engage in majorcountry competition and keep high-end manufacturing within its borders, the US has gone to great lengths to come up with many strategies, including cracking down on others and luring chipmakers with subsidies.

“However, due to its many strict criteria, including requirements for the location of new factories and restrictions on sales to and investments in China, there has been no significant progress,” Ma told the Global Times on Wednesday.

“The chip industry is formed through a natural process of the global division of labor. It is indeed very difficult for the US to completely disrupt and reshape the division of labor through artificial means,” Ma noted.

China’s chip industry has continued to rise, with improving technological capabilities and expanding production and market share, experts noted.

“Measures used by the Biden administration to crack down on China’s high-tech industry have not restricted the continued development of China’s chip industry. They have only accelerated the independent research and domestic substitution of products, prompting Chinese companies to reduce their dependence on imported chips,” Xiang Ligang, director-general of the Beijingbased Information Consumption Alliance, told the Global Times on Wednesday.

Xiang noted that since the US launched the chip war, Chinese chipmakers have expanded production, lifting the nation’s self-sufficiency rate to 30-35 percent.

Ma said that China’s chip production capacity could reach 50 percent of the world total by 2025.

“China’s chip self-sufficiency rate is rapidly increasing, and China’s chip production capacity will account for an increasing proportion of the global chip market. This is inevitable,” Ma said.