Hong Kong — Seldom have such small chips carried such a heavy load. China’s fledgling semiconductor industry, after a messy birth, now finds itself in the crosshairs of conflicting political goals in Beijing and Washington. Chips are a key plank of China’s industrial plans, attracting a massive $150bn government subsidy. This reflects national angst over reliance on overseas markets — it spends more on importing semiconductors than oil — and a fear, as one banker puts it, of being left in the dark "in case the US flips the switch". Washington harbours its own fears: that these subsidies will distort the market, dent its own domestic industry, jeopardise the edge it has held in the technology and threaten security. "Chinese industrial policies in this sector, as they are unfolding in practice, pose real threats to semiconductor innovation and US national security," wrote the President’s Council of Advisors on Science and Technology in a letter to US President Barack Obama earlier thi...

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