Beijing is on course to dominate innovation in and production of legacy semiconductor chips, which strategists see as a way to push back against U.S.-led containment in critical technologies. These chips, used everywhere from vehicles to defense, offer a scalable and resilient path for latecomers to build industrial leverage without needing frontier innovation. The Chinese domestic industry relies on vast state subsidies and fosters internal competition that leads to brutal price wars between firms. This ultimately allows manufacturers to undercut overseas competitors and drive them out of business, thereby capturing the global market share and reshaping supply chain dependencies. This strategy prioritizes market dominance over profitability, part of a broader shift from growth-centric to security-driven industrial planning. Chinese experts hold up Japan’s past missteps as a key lesson, and advocate remaining aligned to market demand to avoid stagnating.
Encircling the West: The PRC Gains Ground in Legacy Chips – Jamestown
