HK$2.84b sought to set up institute in chip tech push

Authorities are seeking HK$2.84 billion in funding to establish a research institute focused on developing semiconductor technology, Secretary for Innovation, Technology and Industry Sun Dong has said, adding that United States-led chip export restrictions to the mainland will not hinder the facility’s operations set to start in 2025.

Sun told lawmakers yesterday the increase in mainland domestic production activity of third-generation semiconductor equipment would alleviate the future impact of Western restrictions.

“The development of the semiconductor industry does not necessarily rely on advanced lithography machines that are prohibited from being exported to China,” Sun told a Legislative Council panel meeting. Lithography equipment is critical to the chip-making process.

In this year’s policy address, Chief Executive John Lee Ka-chiu said the city would establish a Microelectronics Research and Development Institute at Yuen Long InnoPark next year.

“The objective is to lead and facilitate collaboration among universities, research centres and industries to study the core technologies of third-generation semiconductors, leveraging the comprehensive manufacturing industry chain and vast market of the Greater Bay Area,” Sun said.

The bay area refers to Beijing’s initiative to integrate Hong Kong, Macau and nine mainland cities into an economic powerhouse.

The institute will set up two major pilot production lines to conduct research and testing on silicon carbide and gallium nitride, both promising compounds in the field of new material technology, as part of a growing push towards electric vehicles and renewable energy sources.

Sun said semiconductor equipment would depend on support from the motherland, given the city’s limitations.

“There are many semiconductor equipment manufacturers in mainland China, and some companies even manufacture semiconductors in Hong Kong,” he said. “They are currently in discussions with us on how to leverage Hong Kong as a platform to enter the international market.”

According to World Semiconductor Trade Statistics, the global chip market was worth US$580 billion last year and was expected to exceed US$1 trillion by 2030, while the mainland made up around 40 per cent of the market.

Sun said the bureau would seek approval by the end of the second quarter in 2024 from Legco’s Finance Committee on the funding of HK$2.84 billion, of which HK$$2.48 billion would be allocated to procure the pilot lines equipment. The remaining HK$360 million would go into operating expenses for the first five years, he said.