[China] $143 billion support package for domestic chip firms

China is working on a more than 1 trillion yuan ($143 billion) support package for its semiconductor industry, in a significant step towards self-sufficiency in chips, The Japan Times reports.

The move is also designed to counter US attempts to slow China’s technological advances, according to three sources with knowledge of the matter.

Beijing intends to roll out what will 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.

As analysts predicted, this signals a more direct approach by China to shape the future of an industry which has become a geopolitical hot button due to a rocketing demand for chips and which Beijing reportedly sees as a cornerstone of its technological strength.

Analysts believe the move will exacerbate concerns from the US and its allies about China’s competition in the semiconductor industry. Some US lawmakers have already expressed worry about China’s chip production capacity buildup.

The plan could be implemented as soon as the first quarter of next year, according to two of the sources who reportedly declined to be named as they were not authorised to speak to media.

The majority of the financial assistance would be used to subsidise the purchases of domestic semiconductor equipment by Chinese firms, mainly semiconductor fabrication plants, or fabs, the sources said.

These companies would be entitled to a 20 per cent subsidy on the cost of purchases, all three sources said.

The fiscal support plan follows  a sweeping set of regulations passed in October by the U.S. Commerce Department passed in October. The regulations could bar research labs and commercial data centres’ access to advanced AI chips, among other curbs.

The United States has also reportedly been lobbying some of its partners, including Japan and the Netherlands, to tighten exports to China of equipment used to make semiconductors.

In August, President Joe Biden signed a landmark bill to provide $52.7 billion in grants for US semiconductor production and research as well as tax credit for chip plants estimated to be worth $24 billion.

With its own incentive package, Beijing aims to step up support for Chinese chip 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 country’s semiconductor industry, they said.

China’s State Council Information Office did not immediately respond to a request from The Japan Times for comment on the matter.

Source: The Japan Times

(Link via original reporting)

China is working on a more than 1 trillion yuan ($143 billion) support package for its semiconductor industry, in a significant step towards self-sufficiency in chips, The Japan Times reports.

The move is also designed to counter US attempts to slow China’s technological advances, according to three sources with knowledge of the matter.

Beijing intends to roll out what will 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.

As analysts predicted, this signals a more direct approach by China to shape the future of an industry which has become a geopolitical hot button due to a rocketing demand for chips and which Beijing reportedly sees as a cornerstone of its technological strength.

Analysts believe the move will exacerbate concerns from the US and its allies about China’s competition in the semiconductor industry. Some US lawmakers have already expressed worry about China’s chip production capacity buildup.

The plan could be implemented as soon as the first quarter of next year, according to two of the sources who reportedly declined to be named as they were not authorised to speak to media.

The majority of the financial assistance would be used to subsidise the purchases of domestic semiconductor equipment by Chinese firms, mainly semiconductor fabrication plants, or fabs, the sources said.

These companies would be entitled to a 20 per cent subsidy on the cost of purchases, all three sources said.

The fiscal support plan follows  a sweeping set of regulations passed in October by the U.S. Commerce Department passed in October. The regulations could bar research labs and commercial data centres’ access to advanced AI chips, among other curbs.

The United States has also reportedly been lobbying some of its partners, including Japan and the Netherlands, to tighten exports to China of equipment used to make semiconductors.

In August, President Joe Biden signed a landmark bill to provide $52.7 billion in grants for US semiconductor production and research as well as tax credit for chip plants estimated to be worth $24 billion.

With its own incentive package, Beijing aims to step up support for Chinese chip 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 country’s semiconductor industry, they said.

China’s State Council Information Office did not immediately respond to a request from The Japan Times for comment on the matter.

Source: The Japan Times

(Link via original reporting)