China’s Giant Chip Ambitions Fall Prey to Covid Turmoil

Published on February 12, 2023

Due to economic disruptions caused by a surge in COVID-19 cases, China’s central government has paused subsidies to its domestic microchip industries. Microchips, upon which artificial intelligence and military systems increaisngly depend, are at the center of technological competition between China and the United States.

The cumulative pause of $100 billion in subsidies over the past several years has led Beijing to take a more selective eye on the projects it undertakes vis-a-vis chips and semiconductors. All the more so now that Chinese companies are cut off from American participation in advanced semiconductor manufacturing.

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