“The problem is that China doesn’t know exactly where all the investment in the chip sector is going,” says BNR China expert John-Boy Vossen. “There is a lot of corruption. And if you keep depositing money and the result is disappointing, obviously you’d rather spend that money differently, even if the chip industry is a spearhead.’
The coronavirus plays an important role in this decision. The aftermath of the virus has a major impact on the Chinese economy. For example, some factories cannot produce at full capacity.’ China is therefore now suspending investments in the chip sector – which amount to an estimated $135 billion – to pump money into the economy in a different way.
Disappointing results
China said in 2015 that it wants to produce 40% of all chips by 2020 and 70% by 2025. ‘They have therefore invested heavily in the chip sector, but the results are disappointing. In the end, they make “only” seventeen percent of the production.’