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Faced with US sanctions, China prepares $143 billion chip support package

China is reportedly preparing a support package – worth more than 1 trillion yuan (USD 143 billion) – to aid its domestic semiconductor industry.

The package, should it be realised, is a significant step towards self-sufficiency in the semiconductor space and a direct response to U.S. sanctions placed on the country, three sources told Reuters.

According to the sources, Beijing intends to implement one of its largest incentive packages – distributed over five years – primarily in the form of subsidies and tax credits, to support the country’s semiconductor production and research initiatives.

The majority of the financial aid would, according to the sources, be used to subsidise investments in domestic semiconductor equipment.

Back in October, the US put added pressure on the Chinese semiconductor industry with updated regulations and restrictions. The US it launched a series of updates to its export regulations concerning semiconductors and associated technologies to China. As previously reported by Evertiq, two of the nine new rules stood out, given the scale of both the short-term and long-term impact that they will cause.

One of the new rules restricts the ability for residents in the US (citizens and foreign nationals) to invest in and support the development and production of ICs at China-based semiconductor fabs without a license. The other one limits the supply of equipment and tools to any "advanced fabs" in China – more specifically, this involves technology of NAND chips with 128 layers or more, and DRAM chips 18nm and below, as well as advanced logic chips of 16nm or 14nm.

The support plan is said to be a direct response to restrictions put in place, which have intensified and deepened sanctions against China's semiconductor industry.

The sources told Reuters that Beijing’s aim with the incentives package is to beef up its support for domestic semiconductor companies to build, expand and modernise its facilities – for all steps, fabrication, assembly, packaging, as well as R&D.

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February 01 2023 11:01 pm V20.12.5-2
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