Western chip subsidies will benefit China

IF THERE is one certainty about the coming year, it is that geopolitical rivalries will persist.

For the European Union, this will translate largely into an effort to reduce dependence on foreign suppliers, especially of critical goods. For the United States, the focus will be on maintaining military supremacy by denying potential adversaries – namely, China – access to relevant technologies. Both approaches overlap in an important area: the chips industry.

Because advanced microchips are central to many advanced weapons systems and integral to economic security and prosperity, the industry has become a key arena in today’s geopolitical competition. To improve their chances of prevailing in the “chip war”, all large economic powers have implemented major programmes to support their domestic chipmakers.