Government support urged in China's chip sector

TAIYUAN - China needs to enhance support for the domestic chip sector, an academic has warned, after it emerged that the country spends more on importing these electronic fundamentals than it does on importing oil.

China spends more than $200 billion buying imported chips annually, according to figures released at an information industry forum that concluded on Sunday in north China's Shanxi province.

"China should increase investment to boost research and development for domestically made chips if it wants to achieve sustainable development in the sector," Ni Guangnan, with the Chinese Academy of Engineering, urged.

The chip sector, widely seen as a core of the information industry, is of increasing concern to industry insiders in China owning to the huge reliance on foreign brands.

China manufactures about 77 percent of the world's mobile phones, but domestically made cellular chips are used in less than 3 percent of them. Similar situations can be found in made-in-China computers and TV sets, according to a State Council report published in late 2014.

"In many areas, we lack core technology such as chips," said Zou Xuecheng, with the Research Center for Integrated Circuit Design in the central province of Hubei. "So even though China is a manufacturing powerhouse, we only get a very small share of the total revenue."

Zou attributed the stagnant development of Chinese chip makers to high rates of tax.

Under current policies, China's chip makers need to submit a 10-percent income tax and 5-percent business tax, far more than their competitors pay abroad.

Ni said the chip sector is both money- and technology-intensive, and that its development desperately needs government support.

"The government should guide chip manufacturers by building financing platforms and encouraging innovation, if it wants to see sound development in the sector," the academic added.