Top China Leadership Furious Over Failed Chip Plans- Crackdown Launched

tech.hindustantimes.com:

China's top leadership has grown increasingly frustrated with a years-long failure to develop semiconductors that can replace US circuitry, an embarrassment capped by a flurry of anti-graft probes into top industry officials and the $9 billion rescue of Tsinghua Unigroup.

Senior officials are angry at how tens of billions of dollars funneled into the industry over the past decade haven't produced the sorts of breakthroughs that emerged from previous national-level scientific endeavors, according to people familiar with top government officials' thinking. Washington, which has steadily ratcheted up restraints on China, has been able to strong-arm Beijing and successfully contain its technological ambitions, they said, asking not to be identified revealing sensitive deliberations.

The investigations have sent shockwaves through a semiconductor industry long accustomed to top-level support. Xi Jinping's government had allocated more than $100 billion to build up a domestic semiconductor sector so the country could break its dependence on the West. A key area of scrutiny is the National Integrated Circuit Industry Investment Fund -- known within the industry as Big Fund -- which had become Beijing's primary vehicle for doling out capital to the country's chipmakers.

“If you're going to be putting tens of billions of dollars in an industry, regardless of whether it's a high technology one or just like building trains and airports, you're going to have illicit dealings going on,” said Jordan Schneider, a senior analyst at Rhodium Group and host of the China Talk podcast.

The government is investigating the head of the Big Fund, Ding Wenwu, who had once warned it was “unrealistic” to cut corners in developing chip technologies.