Chinese authorities are opening criminal cases against officials responsible for

Chinese authorities are opening criminal cases against officials responsible for semiconductor import substitution

In 2014, at the initiative of the PRC authorities, the China Integrated Circuits Industry Investment Fund (CICF) was established, the funds of which came from state-backed banks and were distributed to companies engaged in the development of national production of semiconductor components. The stalled import substitution initiative is now urging investigators to find out how efficiently the fund’s resources have been spent.

    Image source: SMIC

Image source: SMIC

As the publication explains Nikkei Asian ReviewActivity in the judiciary has picked up in anticipation of the next Chinese Communist Party Congress scheduled for this fall. The country’s political leadership is puzzled by the lack of obvious achievements in increasing the PRC’s technological sovereignty in recent years. In fact, in 2015 it was decided that China should increase the proportion of semiconductor components produced in its territory for domestic use from 10% to 70% within ten years. Now, according to experts, this level does not exceed 20-30%, and there is not much time left until 2025.

In late July, Ding Wenwu, former president of the CICF Profile Fund, was under investigation on suspicion of using public funds for personal gain. Before heading the fund, Ding Wenwu was head of the Semiconductor Industry Department at the Ministry of Industry and Information Technology of the People’s Republic of China. Since its inception, the fund has raised $50.3 billion and distributed about two-thirds of that amount.

In the past month, investigative authorities have launched criminal proceedings against several other officials linked to the foundation’s activities. The former head of the Chinese company Tsinghua Group, Zhao Weiguo, and his deputy, Diao Shijing, were arrested. CICF funds have been used to support companies belonging to Tsinghua Holding, a maker of YMTC memory and a developer of UNISOC processors.

China sold $150 billion worth of semiconductor products last year, three times the amount in 2015. This volume was still not enough to meet domestic demand, and the cost equivalent of semiconductor product imports to China doubled in 2021 compared to 2015 to $400 billion. Meanwhile, US sanctions against this sector of China’s economy only tightened. This year China has been banned from exporting equipment capable of making chips with lithographic standards of 14nm and below, and companies applying for US subsidies must abandon plans to start producing components in China with technologies up to and including 28 nm to expand for 10 years.

About the author

Dylan Harris

Dylan Harris is fascinated by tests and reviews of computer hardware.

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