Abstract: Different from the import substitution strategy in the early stage of industrialization, the basic direction of domestic substitution in the late stages of industrialization is the core materials, core components, core equipment, core processes and core algorithms supported by the key core technologies. The global supply chain is facing unprecedented realistic and potential threats due to the non-economic impacts such as the "science and technology decoupling" between China and the US and the COVID-19 epidemic. At present, the primary logic of domestic substitution is shifting from benefit logic to safety logic. China urgently needs to build an independent and controllable supply chain through domestic substitution, so as to effectively prevent and defuse industrial chain risks. Government policies or market mechanisms alone are not enough to gain a competitive advantage in the high-tech field. Promoting domestic substitution should better play the guiding role of industrial policy in the market economy. The guiding role of industrial policies is embodied in four aspects: mobilizing companies to enter relevant sub-sectors, enhancing their R & D motivation and capabilities, alleviating their financing bottlenecks, and expanding their market application space.