China preparing $143B stimulus package for its chip firms in face of US restrictions

China is working on an over 1 trillion yuan ($143 billion) support package for its semiconductor industry, three sources said, in a major step towards self-sufficiency in chips and to counter US moves aimed at slowing its technological advances.

According to the sources, Beijing intends to implement one of its largest fiscal incentive packages over the following five years, primarily in the form of subsidies and tax credits to support domestic semiconductor production and research initiatives.

It indicates, as analysts had predicted, that China will take a more assertive stance in determining the course of an industry that has become a geopolitical flashpoint as a result of soaring chip demand and that Beijing views as the foundation of its technological clout.

The plan might be put into action as early as the first quarter of the following year.

The majority of the financial aid would go toward financing Chinese businesses' purchases of domestic semiconductor equipment, primarily semiconductor fabrication facilities.

According to the sources, such companies would be entitled to a 20% subsidy on the cost of purchases.

The financial support plan follows the US Commerce Department's adoption in October of a broad set of regulations that, among other restrictions, may prevent research labs and commercial data centres from accessing cutting-edge AI chips.