According to reports in US media on Tuesday, the People's Republic of China is preparing to launch a state-backed investment fund to bolster the country's semiconductor industry amid US attempts to block Chinese access to high-end microchips.
This comes amid an effort, now more than a year old, to block China's access to high-end microchips produced in the Netherlands, Taiwan, South Korea, Japan, and the United States.
On Monday, US Commerce Secretary Gina Raimondo told US media the US was "not going to sell the most sophisticated American chips to China that they want for their military capacity," adding that the US was "going to be as strict as can be and as hardline as possible denying China the most sophisticated chips."
The US has pushed its partners to restrict or ban sales to China and to relocate its production facilities out of or away from China, especially to Europe or the United States. At home, the US has funneled huge amounts of money into its own semiconductor industry and is aggressively searching for new sources of rare earth metals, for which China is the world's top supplier at present.
Angelo Giuliano, a Hong Kong-based political and financial analyst, told Sputnik "the Chinese like to say: if there are measures there can also be counter-measures."
"This investment initiative is, for China, mainly about countering the aggressive US policies in the semiconductor industry. China has been given limited access to high-end microchips from the US/South Korea and Taiwan," he explained. "The US has issued the CHIPS and Science Act which is $280 billion comprising $39 billion in subsidies for chips manufacturing, $13 billion for semiconductor research and workforce training, and other massive tax incentives. So, China had to take serious steps to catch up with the CHIP alliance (South Korea, Taiwan, Japan, US)."
"One of the main challenges is to get the photolithography machines for semiconductors which come mainly from ASML, a Dutch firm which has the most advanced technology and that is not allowed to sell to China," Giuliano added.
Indeed, reports in Chinese media have indicated that several firms have filed for patents or have ongoing research efforts into several types of advanced lithography - the method for forging the smallest microchips - such as extreme ultraviolet lithography (EUV) and immersion deep ultraviolet (DUV) lithography. However, none have approached production of the minute size of the 5-nanometer microchips made by ASML, or even smaller.
"We have seen many times before that China has the ability to catch up quickly and might end up, in the long run, surpassing the current most advanced Western semiconductors technologies. The West made China withdraw from the airspace program - China then built its own," he noted.
"China has been proven to turn set-backs and attacks by the collective West into opportunities to enter into new industries and achieve a long term goal of self-sufficiency," he said.
"With the help of Chinese government funding and great foundations/infrastructures for the high tech industry," Giuliano said China could develop "a great and mature market, the largest pool of Science, Technology, Engineering, and Maths (STEM) graduates, high-tech hubs for research and development and great support from the state mainly through funding."