CCP’s Great Leap Forward in Chips Industry Mudded with Corruption

As has happened many times, CCP’s (Chinese Communist Party) habit of pouring piles of cash into national strategic industries has led to corruption. In China’s Semiconductors industry, the “Big Fund” was created in 2014 to spur self-reliance in chipmaking capacity. Backed by CCP’s central government investors, it has raised 343bn Yuan (approx.$50bn). Recent news reveals that several “Big Fund” executives are involved in corruption investigations, including the former head of the fund, Ding Wenwu.

Chips are used in every industry from smartphones to missiles, which explains why CCP leaders want to reduce the reliance on chip imports. However, the chip development progress is far from what the CCP had hoped for. The realization of self-reliance could still be decades away, should the best scenario turn out to be achievable.

The development of China’s chip industry was coupled with scandals from the start. The very first “home-grown” chip unveiled in 2003, as exposed 3 years later, was an uncovered American chip with its marks scratched off, re-printed as the name “Han Xin 1”, meaning the 1st China-made Chip.

The chip industry’s unprecedented expansion was driven by CCP’s state aid policy. In the year 2020 alone, there are over 22,000 new chip companies registered countrywide. That year a Chip company in Hubei province closed after receiving millions of Yuan funds from local subsidies. In 2021 Tsinghua Unigroup, a leading state-owned chip maker was forced to restructure or go bankrupt. Also, two of its former managers were involved in corruption scandals.