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China is looking to reduce its dependence on foreign manufactured chips following the deterioration of relations with the US

China is set to invest close to $19 billion in domestic chip production, as the country looks to wean itself off of US made tech in its telecoms manufacturing sector.  

China’s state backed National Integrated Circuitry Investment Fund will announce the investment to support the development of China’s domestic chip manufacturing sector.

The move comes following a slew of aggressive trade tariffs imposed by the US on Chinese companies and the subsequent banning order placed on Chinese kit manufacturer ZTE.

"The ZTE incident is a wake-up call for China to shed reliance on foreign technologies and give careful attention to currently stalled efforts to improve domestic chip design," Miao Qiguang, a professor at the School of Computer Science and Technology at Xidian University, told the China Daily newspaper.

In its first round of funding, National Integrated Circuitry Investment Fund, raised $22 billion for China’s chip and circuit sector. The second round of fund raising is now underway and is expected to raise upwards of $19 billion.

In 2016, Chinese produced chips accounted for just 16.2 per cent of the total global production, according to a report by PWC. The Chinese government will be looking to dramatically increase that number in the coming years, as it looks for alternatives to US producers such as Qualcomm.

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