China is weighing a sizable new round of support for its domestic semiconductor industry, as officials deliberate incentives that could total between 200 billion yuan and 500 billion yuan, according to people familiar with the discussions. The proposals, which are still being refined in terms of size, structure and beneficiaries, could translate into as much as $70 billion in subsidies and financing support. The scale of the effort, even at the lower end, begins to approach the funding level of Washington’s Chips Act and reflects Beijing’s intention to reduce reliance on overseas suppliers such as Nvidia 
NVDA, despite recent US policy shifts that allowed the sale of some advanced chips, including the H200, into China.
People involved in the talks said the new package would operate separately from existing initiatives such as the roughly $50 billion Big Fund III equity investment program overseen by the Ministry of Industry and Information Technology. At the upper range, the proposal could become the largest state-backed semiconductor incentives program China has ever contemplated, at a time when governments across Europe and the Middle East are also stepping up efforts to secure domestic chip production tied to AI and national security. President Xi Jinping has previously outlined a whole-nation strategy to strengthen semiconductor capabilities, reflecting concerns about the reliability of access to US technology following export controls imposed by three administrations starting with Donald Trump’s first term.
That policy backdrop has already begun to reshape China’s chip ecosystem. Semiconductor Manufacturing International Corp. continues to expand as Huawei’s primary manufacturing partner, even without access to the most advanced tools, while AI chip designer Moore Threads Technology has seen its shares rise more than 600% since its Shanghai debut. Officials have also encouraged companies to prioritize domestic components and to avoid Nvidia’s H20 chips designed for China, with Nvidia executives saying their share of China’s AI chip market has dropped to zero. Even with the proposed incentives, China’s technology is still estimated to lag the most advanced processes at Taiwan Semiconductor Manufacturing Co. by about six years, suggesting the funding push could be aimed at narrowing, rather than eliminating, that gap over time.
