Chinas Legacy Chip Strategy Challenges US Dominance

The US is trying to limit China`s ability to produce advanced semiconductors by restricting exports and investing in domestic production. In response, China is focusing on mass-producing older, less advanced chips, known as legacy chips.

China`s aggressive strategy involves significant government subsidies and below-market loans, allowing them to offer chips at much lower prices than competitors. This has allowed them to rapidly increase their market share, raising concerns about potential price collapses similar to those seen in the solar and steel industries.

While China is primarily serving its domestic market, its growing dominance in legacy chip production could have significant implications for the global semiconductor industry, as these older chips are essential components in a wide range of electronics.