China plans over $143 bln push to boost domestic chips, compete with U.S. -sources

China High Speed Transmission Equipment

13/12/2022 06:58

By Julie Zhu
       HONG KONG, Dec 13 (Reuters) - China is working on a more
than 1 trillion yuan ($143 billion) support package for its
semiconductor industry, three sources said, in a major step
towards self sufficiency in chips and to counter U.S. moves
aimed at slowing its technological advances.
    Beijing plans to roll out 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, said the sources.
    The plan, which according to the sources could be
implemented as soon as the first quarter of next year, has not
been reported before. 
    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,
said two of the sources. 
    Such companies would be entitled to a 20% subsidy on the
cost of purchases, the three sources said. 
    China has a stated policy priority to develop an independent
chip industry.
    The fiscal support plan comes after U.S. President Joe Biden
in August signed a landmark bill to provide $52.7 billion in
grants for U.S. semiconductor production and research as well as
tax credit for chip plants estimated to be worth $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 country's semiconductor industry, they said.  
    The sources declined to be named as they were not authorised
to speak to media. 
    The State Council Information Office did not immediately
respond to a request for comment.   
    ($1 = 6.9796 Chinese yuan renminbi)
 (Reporting by Julie Zhu in Hong Kong; Additional reporting by
Josh Horwitz and Brenda Goh in Shanghai, Kevin Huang and Xu Jing
in Beijing; Editing by Sumeet Chatterjee and Muralikumar
Anantharaman)
 ((julie.zhu1@thomsonreuters.com; +852 2843 6519; Reuters
Messaging: julie.zhu1.thomsonreuters.com@reuters.net))