China ramps up chip industry amidst trade war

Amid trade war tensions, Chinese government is pushing its own semiconductor industry. Beijing highlighted that semiconductors are a key part of the Made in China 2025 plan, whereby it aims to produce 40% of the semiconductors by 2020, and 70% by 2025.

Huawei being blacklisted and the potential of difficult trade relations is pushing China to become self-sufficient in the semiconductors sector, whereby it currently relies heavily on the US.

The industry in the second largest world economy is still nascent, and perhaps a decade or two away from imposing as a serious US competitor. However, the US has gained significant benefits from selling its technology chips to Chinese tech companies.

China is also giving tax breaks to the industry to boost the innovation and production of these chips. If the sector does reach its aims, most other countries could benefit from having US and China compete. But that day is still a long way down the road. The important question today is how this move will affect the trade war.

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