China’s Giant Chip Ambitions Fall Prey to Covid Turmoil
- Beijing is moving away from lavish spending on chip projects
- Future investment could focus on EVs and new chip techniques
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For years, China was the world’s biggest spender on chip incentives, a scale unmatched from Washington to Tokyo. Now, the effort to combat Covid and deal with the threat of a global recession is depleting state coffers and forcing Beijing to rethink that controversial approach.
Surging Covid cases are hobbling the world’s No. 2 economy and forcing its government to pause mammoth spending on its domestic chip industry. In a market dominated by the US and its allies, costly subsidies have so far borne little fruit and led to several high-profile corruption investigations. Policymakers are now searching for other ways to help homegrown chip firms.