Chinese local govt incentives aim to end nation’s Achilles’ heel in semiconductor sector

Source:Global Times Published: 2019/5/16 21:33:40

Local govt incentives aim to end nation’s IC Achilles’ heel

William Xu, board director and chief marketing officer of Huawei, shows the new CPU chipset to the audience. Photo: Chen Qingqing/GT

Local governments in China are offering incentives to support the development of the domestic integrated circuit (IC) sector, an industry that the nation is promoting to reduce  reliance on imports amid a year-long trade war with the US and an intensifying technology race. 

One example is Shenzhen in South China's Guangdong Province. For Shenzhen IC companies whose annual revenues have exceed 100 million yuan, the Shenzhen government will give a one-time reward to the enterprises' core team with 1 million yuan, according to an action plan issued by the Shenzhen government in recent days which aims at accelerating the development of IC industry. 

For revenues that are above 300 million yuan, the rewards are 2 million yuan. For revenues that surpassed 500 million yuan and 1 billion yuan, the rewards are 3 million yuan and 4 million yuan. Companies with revenues exceed 2 billion yuan will receive 5 million yuan in rewards. 

To support key core technological breakthroughs, the action plan proposes that each year, the Shenzhen government should survey demand for products and call for bids from around the world. The city will sponsor up to 50 percent of the research and development (R&D) costs for a project team that achieves a major technological breakthrough.

The action plan also encourages universities and research institutions to carry out R&D into cutting-edge IC technologies. A one-time award of up to 3 million yuan will be given to those who have won the National Natural Science Award, National Technology Invention Award, and National S&T Progress Award. 

"Most of Chinese chips are used in storage, multipoint control units, semiconductor devices and other low-end products," Wang Yanbo, an expert at the Open Handset Alliance, told Global Times on Thursday. The move signals that China is encouraging IC makers, institutes and investors to break monopolies and blockades of advanced chips from developed economies, especially the US.

China is also increasing efforts involving domestic chips to support its industries in the global high-technology race. 

Shenzhen, which previously relied on imported material and domestic assembling and manufacturing, is now keen on R&D into basic IC technology, Fu Liang, a veteran telecom industry observer in Beijing, told the Global Times on Thursday.

"It is a natural step in industry upgrading as ICs play a core role in the nation's move toward intelligence, and the process has been accelerated amid the China-US trade war," said Fu.The chip industry came into the media spotlight last year after the US banned ZTE from purchasing US chips and components, which pushed the Chinese technology company to the verge of collapse. 

China has been the world's largest market for chips for many years. But China-based IC production was worth only $23.8 billion in 2018, while imports totaled $312 billion.

Newspaper headline: Local govt incentives aim to end nation’s IC Achilles’ heel


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