China readies support for semiconductor industry to rival US firms
CHINA is working on a support package of more than one trillion yuan (S$194.3 billion) for its semiconductor industry, three sources said, in a major step towards self-sufficiency in chips, and to counter US moves aimed at slowing its technological advances.
This would be one of the country’s biggest fiscal incentive packages in over five years. The sources said that with it, Beijing would step up support for Chinese chip companies to build, expand or modernise domestic facilities for fabrication, assembly, packaging, as well as research and development.
They also said that Beijing would implement the package mainly in the form of subsidies and tax credits, to bolster semiconductor production and research activities in the country. A majority of the financial assistance would be used to subsidise the purchases of domestic semiconductor equipment by Chinese companies. The sources added that such companies, mainly semiconductor fabrication plants, would be entitled to a 20 per cent subsidy on the cost of purchases.
Support could be rolled out as soon as the first quarter of next year, said two of the sources, who declined to be named as they were not authorised to speak to media.
News of the package came after the US Commerce Department passed in October a sweeping set of regulations, which could bar research labs and commercial data centres’ access to advanced artificial intelligence (AI) chips, among other curbs. Meanwhile, in August, US President Joe Biden signed a landmark bill to provide US$52.7 billion in grants for domestic semiconductor production and research, as well as tax credit of about US$24 billion for chip plants.
The sources said that Beijing’s latest plan also includes preferential tax policies for the country’s semiconductor industry. Both state-owned and private enterprises, including large semiconductor equipment companies such as Naura Technology Group, Advanced Micro-Fabrication Equipment, and Kingsemi, would benefit from this, they added.
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Some Chinese chip shares in Hong Kong rose sharply after news of the package. Semiconductor Manufacturing International Corp rose more than 4 per cent, sending its daily gain to about 6 per cent. Meanwhile, Hua Hong Semiconductor surged more than 12 per cent. Mainland markets were closed at the time.
Achieving self-reliance in technology featured prominently in President Xi Jinping’s full work report at the Communist Party Congress in October. The word “technology” was referred to 40 times, up from 17 times in the 2017 report.
Analysts said that Xi’s call for China to “win the battle” in core technologies could signal an overhaul in Beijing’s approach to advancing its tech industry, with more state-led spending and intervention to counter US pressures.
China’s State Council Information Office did not immediately respond to a request for comment. REUTERS
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