China mulls $70 billion domestic chip fabrication injection, would be largest of any government semiconductor investment — Huawei and Cambricon among candidates in push to compete with Nvidia, other U.S. firms

China is considering an additional $70 billion in investment for its domestic chip industry, as reported by Bloomberg. This would be on top of existing government investment initiatives like the Big Fund III from earlier this year, and could accelerate chip fabrication design and development to help it compete with the likes of Nvidia, even as the Trump administrative re-approves sale of H200 GPUs in the region.

Over the past year, China has announced a number of major projects and initiatives in an attempt to bolster its own domestic chip supply, reduce reliance on mercurial U.S. supplies, and fix its share of the global chip shortage. Some of these have encouraged domestic chip production, while others were designed to discourage the use of hardware from international sources. Smuggling efforts are still rampant, however, and with Chinese chip designs several years and generations behind the best Nvidia and AMD have to offer, China still has a long way to go before it can replace these external sources.

An investment of this size would help close the gap, though. The figures and exact companies to receive the funds (and in what fashion) are reportedly still being worked on, but the numbers being thrown around are extremely large, regardless. The low end is said to be $28 billion, but it could be as large as $70 billion, which exceeds the amount of direct industry investment the Biden administration instigated with the US CHIPS Act. Indeed, if enacted in its entirety, such an investment would be the largest governmental expenditure on semiconductor manufacturing anywhere in the world.

This tracks with Chinese President Xi Jinping's approach to domestic chip manufacturing. He reportedly called for a "whole-nation" approach to bolstering it, seeing it as both a strategic imperative for defence, and to break the economic stranglehold the US has on cutting-edge silicon manufacturing.

China has previously offered energy subsidies to companies using domestic silicon and mandated that Chinese companies utilize at least 50% domestically produced chips in their data centers. That's only for running AI using inference workloads, though. When it tried to force DeepSeek to use Huawei chips for training, they swiftly went back to Nvidia. The performance, effectiveness, and efficiency just weren't there.

There have been rapid advances made in China's chip technology, with some firms claiming to have used advanced assembly and packaging technologies to enhance the performance of older process nodes. That has yet to be proven, and there are still concerns over heat output and manufacturing yield, but China is pulling out all the stops to become independent for future semiconductor manufacturing. This latest investment vehicle plan is just the latest example.

Follow Tom's Hardware on Google News, or add us as a preferred source, to get our latest news, analysis, & reviews in your feeds.