The chip industry was changing in ways that weren’t favorable to China. “The scale of investment has risen rapidly and market share has accelerated to the concentration of dominant firms,” China’s State Council noted in one technology policy report. These dominant firms—TSMC and Samsung chief among them—would be extremely difficult to displace. Yet demand for chips was “exploding,” China’s leaders realized, driven by “cloud computing, the Internet of Things, and big data.” These trends were dangerous: chips were becoming even more important, yet the design and production of the most advanced
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