Govt unveils policies to bolster chip industry

China's latest semiconductor policies will offer a golden opportunity for the chip industry to pursue high-quality development and motivate companies to achieve breakthroughs in crucial technologies, experts said on Wednesday.

The comments came after the State Council rolled out a set of policies on Tuesday, including tax breaks and financing support, to buoy the growth of the integrated circuit and software sectors. The State Council said chip companies of all ownership types, including foreign enterprises, that set up in China can benefit from the new policy incentives.

Wang Peng, deputy head of the China Center for Information Industry Development, said support for semiconductor makers, in what is known as the crown of electronics technologies, will have a profound impact on the industry's development.

"It showcases the government's desire to build a globally competitive semiconductor sector, and it will encourage companies to devote more resources to overcome technological bottlenecks," Wang said.

Semiconductor chips have become a key part of the information technology infrastructure to power the digital economy.

Last year, China, the world's largest semiconductor market, spent about $305.6 billion on chip imports, more than the amount spent on importing crude oil, the General Administration of Customs said. But the number marked a 2.1 percent year-on-year decline, as domestic companies made progress.

Wen Ku, a spokesman for the Ministry of Industry and Information Technology, China's top industry regulator, said the nation's semiconductor sector maintained relatively sound momentum, with more than 100 billion chips produced in the nation in the first half of 2020, marking a 16.4 percent year-on-year increase.

Mi Lei, founding partner of Casstar, a technology investment company based in Xi'an, Shaanxi province, said the new policies, such as granting a 10-year tax break for certain qualified chip companies, showcase the government's "unprecedented" support for the sector over the next decade.

"It will greatly increase integrated circuit enterprises' profits, and boost the confidence of all employees who work in the sector," Mi said, "The move will also attract more private capital to bankroll promising semiconductor companies."

Xiang Ligang, director-general of the Information Consumption Alliance, a telecom industry association, said that compared with previous policies which chiefly benefit chip design enterprises, the new package of favorable measures is designed to support companies in the entire semiconductor chain, including chip equipment, material, packaging and testing.

"Such change underlines a rational and long-term vision for the sustainable development of the semiconductor sector. The importance of chips has been further underlined by the US government's efforts to contain the rise of Chinese tech companies," Xiang said.

The State Council also said that China will continue improving its business environment for international chip companies to invest and develop in the nation. More efforts will also be made to cultivate talent for the semiconductor sector.

Zhang Wenfeng, an engineer at a Shanghai-based chip startup, said he was encouraged by the new policy incentive. "With strong government support and local companies' growing input into R&D, this is the best time for me to work at a chip company."

Cheng Yu contributed to this story.