China is investing $29 billion to replace American chips

After US sanctions early in the year that deprived Chinese companies of key technological elements, the Sino-US techno-economic war takes a new form. China has officially formed an investment fund of 204 billion yuan or $ 29 billion dedicated to investment in the semiconductor industry. A sum partly contributed by the Chinese state which directly injected 44.5 billion yuan through its development bank and the coffers of the Ministry of Finance, not counting the contributions of controlled companies by the state and provincial governments. The nature of these sources illustrates the national desire for this investment.

Why did we mention the Sino-US war when it comes to money that will be for making chips? Simply because this is a topic of technological independence, a problem recently raise by the ban of Trump administration at the beginning of the year of some Chinese companies like Huawei. Overnight, Huawei and other Chinese actors were cut not only major pieces of software, like Android, but also of processors. Even though the Kirin chips are partly is Huawei’s development. The ARM architecture that is at the heart of these chips depends on American technologies. Even though ARM is a British company. Not to mention the dependence on US patents, machines and engineers in areas such as memory.

The amount invested is certainly important, but the challenge remains significant, even for China. If they want to become completely independent in the semiconductor side. It will have to develop not only “home” architectures, but also invent new manufacturing processes. Developing design software or producing production machines. A titanic task that could perhaps allow China to take precedence over the USA. Given the power of some giants like Huawei, nothing seems impossible.