China is preparing a package of subsidies and tax breaks totaling $143 billion to support the microprocessor industry, a decision of geopolitical significance in the technological competition against the United States, Reuters writes.

It will be one of the largest support plans for an industry critical to China, and the program will run for the next five years and will consist of subsidies for investment in new plants, research and expansion of existing capacity. A large part of the support program will be implemented through tax exemptions.

The subsidy program will encourage consolidation, with various Chinese groups also buying semiconductor equipment from China. The goal is for the Chinese industry to develop and produce much newer generations of processors so that the technology gap with Taiwan will eventually be somewhat smaller.

The sources said the subsidies would cover up to 20 percent of the purchase price when a Chinese company buys another local processing company.

Companies that could win include NAURA Technology, Advanced Micro-Fabrication Equipment Inc China and Kingsemi.

The US has imposed a series of bans on Chinese companies exporting various high-tech components to the United States, and there have been reports that the US is trying to persuade some of its allies to deny China access to areas related to technology and national security.

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