As the 14th Five‑Year Plan Advances, Beijing Trains Its Sights on Chips

Policy signals from the Two Sessions

China’s annual “Two Sessions” put integrated circuits squarely at the center of industrial policy, with ministries outlining tighter coordination, targeted funding, and safeguards against waste. According to TMTPost, the Ministry of Industry and Information Technology (MIIT, 工业和信息化部) emphasized breakthroughs in chipmaking equipment, materials, and EDA tools, alongside pushes in mature-node manufacturing and advanced packaging to stabilize supply for autos and industrial control. The National Development and Reform Commission (NDRC, 国家发改委) tied chips to “new-quality productive forces,” promising cluster-based development and better project vetting to curb redundant capacity. The Ministry of Finance (财政部) signaled continued tax support and stronger R&D incentives for firms across design, manufacturing, and packaging. Reportedly, a third phase of the National Integrated Circuit Industry Investment Fund (the “Big Fund,” 国家大基金) is nearing launch, potentially exceeding 300 billion yuan, with tighter governance following earlier anti-corruption probes.

Industry voices call for depth over speed

From the corporate front, NPC deputies and CPPCC members from Huawei (华为), Semiconductor Manufacturing International Corporation/SMIC (中芯国际), Yangtze Memory Technologies/YMTC (长江存储), Naura Technology (北方华创), Advanced Micro-Fabrication Equipment Inc./AMEC (中微半导体), and JCET (长电科技) urged long-cycle capital, patient procurement policies, and talent pipelines that match the industry’s multiyear development arcs. It has been reported that proposals focused on shoring up domestic shortfalls—lithography subsystems, precision optics, high-end metrology, and industrial software—while accelerating chiplets and 3D system-in-package for performance gains without bleeding-edge lithography. Deputies also pushed for standards and security certifications to speed government and SOE adoption of qualified domestic chips, plus supply-chain finance for “specialized, refined, and innovative” SMEs (专精特新) that supply critical tools and materials.

A strategy shaped by geopolitics

The agenda unfolds under intensifying export controls from the United States and its allies. Washington’s rules restrict access to advanced AI accelerators and EDA features, while the Netherlands’ curbs limit ASML’s EUV—and some DUV—lithography shipments to China. SMIC (中芯国际) remains on the U.S. Entity List. The policy throughline? Reduce choke points, build resilience at mature nodes, and climb the value chain via packaging and domain-specific chips. Can China close key gaps without foreign tools? Officials are betting on a “whole-of-nation” approach—but with added guardrails to avoid the boom-and-bust cycles that previously dogged local chip projects.

The takeaway

The message from Beijing’s policy planners and industry heavyweights is unusually aligned: prioritize bottlenecks, reward measurable progress, and link funding to market demand. If Big Fund III lands with stricter oversight and ministries deliver on tax and procurement levers, China’s chip drive could gain durable momentum in equipment, materials, and power semiconductors—even as leading-edge logic remains constrained by geopolitics.