China is stepping up efforts to design and manufacture homegrown semiconductors by providing financial incentives to Chinese companies, amid fears that US sanctions might cripple its high-tech industry, reported the Financial Times.
China’s Ministry of Finance announced tax breaks last week “to support the development of integrated circuit design and the software industry,” cancelling corporate taxes for some companies for two years. While some US chips could be substituted by Chinese equivalents in the next few years, Beijing recognizes that self-sufficiency is a long way off.
Last year, the Ministry of Industry and Information Technology said in a report that China relies on imports for more than 95% of the high-end chips used in computer processors, for more than 70% of those in smart devices, and for the majority of its memory chips.
US restrictions on exports to telecoms equipment maker ZTE and Huawei have sharpened Beijing’s focus on semiconductor self-sufficiency. This will only become more urgent if Washington places other leading Chinese technology groups including Hikvision, Dahua, Megvii, iFlytek and Meiya Pico on its blacklist.