China to step up support for semiconductor industry

The Chinese government will step up support for its chip and integrated circuit manufacturing industries, in the country's 14th five-year plan during 2021-25.

"The government has come with out a variety of measures to support the chip and integrated circuit manufacturing industries, including reducing or exempting the manufacturers' corporate income tax and strengthening and upgrading the industry's foundation such as building the supply chains and cultivating talents," said Tian Yulong, spokesperson of China's ministry of industry and information technology (MIIT), at a press briefing today.

Sales revenues in China's integrated circuit industry increased by 20pc on the year to 88.48bn yuan in 2020. This growth is three times that of the global industry in the same period, said Tian, who also called for more international cooperation to build a global chip industry chain.

The measures came after restrictions imposed by the US on Chinese technology companies in the US-China trade war, which impacted production and sales at several firms including technology giant Huawei.

China in September announced new development plans for strategic industries, which identified key sectors in what the government calls "strategic emerging industries", giving an indication of China's priorities as it seeks to reduce its dependence on technology imports and develop its economy.

Semi-conductors have become mainstream news in the last few months as global demand rebounded from Covid-19 sooner than the industry expected.

A shortage of semiconductors in the vehicle industry because of the pandemic and rising demand from other sectors have disrupted production in Asia-Pacific, Europe and North America in the past few months. Some analysts have estimated that it might take several months for the shortage to ease significantly.