China plans to invest a large amount of money to achieve its chip independence and seek to fight against the U.S. after Washington moves to slow down Beijing’s technological advances.

Reuters cited sources saying that the Chinese authorities are working on a package of more than 1 trillion yuan ($143 billion) to support their semiconductor sector.

The sources disclosed that the measure would be rolled out to counter the U.S. CHIPS and Science Act and eventually aim to achieve its chip independence.

This fiscal incentive package would be allocated over five years as subsidies and tax credits to bolster semiconductor production and research activities in China.

The move, if confirmed, would mean that China is taking a more direct approach to supporting its semiconductor sector, which it sees as a cornerstone of its technological prowess.

The sources said the Chinese authorities may implement this large-scale investment plan in the first quarter of 2023.

Most of the package would be used to subsidize the purchases of domestic semiconductor equipment by Chinese companies, mainly semiconductor fabrication plants. Those businesses would be entitled to a 20% subsidy on the cost of purchases.

The plan is expected to raise more concerns among the U.S. and its allies about China’s competition in the semiconductor industry.

China is eyeing this plan after the U.S. Department of Commerce announced a series of regulations related to comprehensive chip sanctions in October.

These regulations prohibit Chinese scientific research laboratories and commercial data centers from using advanced artificial intelligence chips with U.S. intellectual property rights and other chip restrictions. 

U.S. chip sanctions have forced major overseas chip-making equipment companies to stop supplying major Chinese chip-makers. 

In August, U.S. President Joe Biden signed a bill to offer nearly $53 billion in grants for U.S. semiconductor production and research and tax credit for chip plants estimated at $24 billion.

The U.S. has also been lobbying Japan, the Netherlands, and other partners to tighten exports of equipment used to make semiconductors to China.On December 12, China announced that it had submitted a complaint to the World Trade Organization (WTO) regarding trade disputes over U.S. chip export control measures.

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