Beijing will rethink its semiconductor strategy

Significance

High-profile officials in government departments and state-run investment funds have been placed under investigation. The entities involved include the government's USD44bn 'Big Fund' for driving the sector's development, and chipmaking conglomerate Tsinghua Unigroup, which received a government bailout after defaulting on debt in 2020.

Impacts

• More integration of the semiconductor industry with civil-military fusion projects and sectors such as aerospace is likely.
• Greater state intervention and scrutiny could lead to talented entrepreneurs avoiding the sector, or avoiding the Big Fund.
• China's plans for developing its semiconductor industry do not include an invasion of Taiwan.