China is putting together a huge package said to total more than 1 trillion yuan ($143 billion) for its semiconductor industry, sources have revealed.
The move aims to help the country become self sufficient in the microchips and defeat US moves aimed at slowing its technological advance in that key sector.
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, three sources said.
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, two of the sources said.
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.
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The fiscal support plan comes after US President Joe Biden signed a landmark bill in August 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 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.
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Meanwhile, Chinese officials said this week it will challenge export controls that the US imposed in October on computer chips. The measures were aimed at preventing foreign firms from selling advanced chips to China or supplying Chinese firms with tools to make their own advanced chips – to slow China’s tech and military advances.
Commerce officials said on Monday that the ministry filed a complaint at the World Trade Organisation, alleging that the controls imposed by the US amount to trade protectionism.
Beijing would defend its rights and interests, it said in a statement posted to its website.
The latest move is no surprise, given China said in October it would firmly oppose Washington’s export controls.
- Reuters with additional editing by Jim Pollard
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