China Spends $33 Billion in Subsidies on Semiconductors, Defense in Challenge to US
China spent 213.6 billion yuan ($33 billion) to bolster key industries such as semiconductors and defense in 2020 to ensure a tight technology race with the U.S., according to Nikkei Asia in a May 17 report. The spending is up 14% from 2019. Using listed companies' earnings data gleaned from information company Wind, Nikkei broke down where the subsidies are going, including to top Chinese chipmaker Semiconductor Manufacturing International Co., which received just shy of 2.5 billion yuan along with $2.25 billion in financing from two state-backed funds. China will continue to focus on producing general-purpose chips, as IC Insights predicts that the nation's semiconductors will account for only 19.4% of global demand in 2025.
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The ramp-up in spending by China has prompted growing calls in the U.S. for similar programs, Nikkei said. A bipartisan group of lawmakers is considering $50 billion in subsidies to build up U.S. chip production. In another development related to the subsidies, China's influx of cash into its domestic chip industry could be the subject of a World Trade Organization complaint, as the body forbids subsidies meant for the expansion of domestic production.