China halts its investment in the chip sector

Sources told Bloomberg that China is pausing its investment in the chip sector. And this is while Chinese President Xi Jinping sees the development of his own chip companies as one of his top priorities in order to continue to compete with the United States in the field of economy and defense.

“The problem is that China doesn’t know exactly where all the investments in the chip sector end up,” says John-Boy Vossen, China expert at BNR. There is a lot of corruption. And if you continue to deposit money and the result is disappointing, then of course you will prefer to spend this money differently, even if the chip sector is the spearhead.

The coronavirus plays a significant role in this decision. The consequences of the virus have a huge impact on the Chinese economy. For example, some factories cannot produce max.

So China is now suspending investment in the chip sector – which amounts to about 135 billion – in order to inject money into the economy in a different way.

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Disappointing results

China said in 2015 that it wants to produce 40 percent of all chips by 2020 and 70 percent by 2025. So they invested heavily in the chip sector, but the results are disappointing. In the end they get “only” 17 percent of the production.