China is reportedly preparing a financial support package worth more than $143 billion to help its domestic semiconductor industry. According to sources, the package, which is expected to be distributed over five years in the form of grants and tax credits, is intended to support the country’s semiconductor production and research initiatives. The bulk of the financial assistance is expected to go to subsidize investments in domestic semiconductor equipment.

The package is reportedly a direct response to U.S. sanctions imposed on China’s semiconductor industry, which have intensified in recent months with the implementation of updated regulations and restrictions. One of the new U.S. rules restricts the ability of U.S. residents (citizens and foreign nationals) to invest in and support the development and production of integrated circuits in unlicensed China-based semiconductor fabs. Another rule limits the supply of equipment and tooling to China’s “advanced fabs,” specifically targeting NAND chip technology of 128 layers or more, DRAM chips of 18 nm or less, and advanced logic chips of 16 nm or 14 nm.

The Chinese government’s goal with the incentive package is to boost support for domestic semiconductor companies to build, expand and upgrade facilities at all stages of the manufacturing, assembly, packaging and R&D process. By increasing its self-sufficiency in the semiconductor sector, China hopes to reduce its dependence on foreign suppliers and mitigate the impact of possible future sanctions or restrictions.