China is working on a more than 1 trillion yuan (US$143 billion) support package for its semiconductor industry, three sources said, in a major step toward self-sufficiency in chips and to counter US moves aimed at slowing its technological advances.
Beijing plans to roll out what would be one of its biggest fiscal incentive packages over five years, mainly as subsidies and tax credits to bolster semiconductor production and research activities at home, the sources said.
The plan could be implemented as soon as the first quarter of next year, said two of the sources who declined to be named as they were not authorized to speak to media.
Photo: Reuters
The majority of the financial assistance would be used to subsidize the purchases of domestic semiconductor equipment by Chinese firms, mainly semiconductor fabs, they said.
Such firms would be entitled to a 20 percent subsidy on the cost of purchases, the three sources said.
The fiscal support plan comes after the US Department of Commerce in October passed a sweeping set of regulations, which could bar research labs and commercial data centers’ access to advanced artificial-intelligence chips, among other curbs.
US President Joe Biden in August also signed a landmark bill to provide US$52.7 billion in grants for US semiconductor production and research, as well as tax credit for chip plants estimated to be worth US$24 billion.
With the incentive package, Beijing aims to step up support for Chinese chips firms to build, expand or modernise domestic facilities for fabrication, assembly, packaging, and research and development, the sources said.
Beijing’s latest plan also includes preferential tax policies for the nation’s semiconductor industry, they said.
China’s State Council Information Office did not immediately respond to a request for comment.
The beneficiaries would be both state-owned and private enterprises in the industry, notably large semiconductor equipment firms such as NAURA Technology Group, Advanced Micro-Fabrication Equipment Inc China and Kingsemi, the sources added.
Achieving self-reliance in technology featured prominently in Chinese President Xi Jinping’s (習近平) full work report at the Chinese Communist Party congress in October. The term “technology” was referred to 40 times, up from 17 times in the report from the 2017 congress.
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, analysts have said.
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