SHENZHEN PLANS TO SHOWER CASH ON CHIP INDUSTRY
Tech hub’s move to hand out subsidies comes as China seeks to accelerate development of the sector amid intensified US trade restrictions
China’s tech hub of Shenzhen has doubled down on efforts to grow its local chip industry by promising fat subsidies and cash rewards to the semiconductor businesses registered in the city, as the United States continues to ratchet up trade restrictions on Chinese chip champions.
According to a draft plan published by Shenzhen’s economic planning agency on Saturday, the city will provide support for design of high-end, general-purpose and special-purpose chips, the manufacture of silicon-based integrated circuits (ICs) and packaging of chiplets among other parts along the supply chain. These are areas particularly affected by the recent US trade restrictions.
The Shenzhen Development and Reform Commission, the government agency drafting the plan, is soliciting public opinion on the proposals through to November 8. At the heart of the plan is a goal to achieve breakthroughs in core links including the design and development of central processing units and graphics processing units – currently a weak link in China’s semiconductor industry.
The Shenzhen government has pledged to provide a maximum of 20 per cent, or up to 10 million yuan (HK$11 million), each year towards the IP cores fee for the research and development (R&D) of high-end chips. In other words, the government will foot part of the bill for local chip design firms to buy the necessary knowhow to spur research progress.
Local companies working on open-standard RISC-V chip design architecture can also qualify for subsidies of up to 10 million yuan, or 20 per cent of their R&D investment.
The Shenzhen government wants to boost the adoption of home-grown electronic design automation (EDA) software as well. Companies and research institutions that buy domestic
EDA tools will qualify for a subsidy of up to 10 million yuan each year, or less than 70 per cent of the fees, while those that rent those tools will be given 5 million yuan, or less than half of the expenses.
The government is keen to improve the chip value chain by attracting leading companies, at home and from overseas, which focus on core equipment and components for the IC industry, with up to 30 million yuan in cash rewards if they set up operations in Shenzhen.
The city seeks to attract top talent by providing up to 5 million yuan in rewards for key R&D and management staff.
While the jury is still out on whether government money will help Chinese chip companies manage US restrictions, it highlights the country’s desire to accelerate development of the local chip industry.
Last week, the US Department of Commerce’s Bureau of Industry and Security made two updates to its tech export control rules. This followed a series of US moves to restrict China’s access to semiconductor and other critical technologies.
In August, Washington banned Nvidia and Advanced Micro Devices from selling advanced chips to China used for artificial intelligence and highperformance computing. That was initiated a few weeks after US President Joe Biden signed into law the Chips and Science Act, which provides nearly US$53 billion in semiconductor production incentives on American soil.
President Xi Jinping stressed at a key meeting last month China must step up development of technology critical to national security and adopt a top-down “new whole-country system” to seek breakthroughs.
This is not the first time Shenzhen has sought to boost its chip sector. The local government issued a similar plan in 2019 when it also pledged to support various parties in the supply chain. And in June, it announced a plan to build “an influential cluster” for the semiconductor industry by 2025, aiming to double the value of its existing chip sector within three years to 250 billion yuan in annual sales.