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Corruption is sending shock waves through China’s chipmaking industry

The news: China’s chipmaking industry has descended into chaos, with at least four top executives associated with a state-owned semiconductor fund recently arrested on corruption charges. It’s an explosive turn of events that could force the country to fundamentally rethink how it invests in chip development.

Why it matters: The four executives are past or present employees of the China Integrated Circuit Industry Investment Fund, nicknamed the “Big Fund,” which was established in 2014 to build a supply chain of chips made in China, thus reducing reliance on the US and its allies. The fact that the fund was driven by a political mission and not financial interests made it ripe for corruption.

What’s next: Analysts say the latest investigations may push China to manage semiconductor funding with more precision and professional knowledge. The country was forced to learn by trial and error, meaning more targeted investments into specific companies would be a logical next step—coupled with a new boss for the Big Fund. Read the full story.(paywall)