- Oops!Something went wrong.Please try again later.
The Shanghai municipal government is rolling out a slew of generous incentives to attract talent and firms along the semiconductor supply chain, as part of China's drive to fast track domestic chip industry development.
According to a government policy document published on Wednesday, the Shanghai government will subsidise up to 30 per cent of investment - up to a total of 100 million yuan (US$15 million) - in semiconductor materials and equipment projects in the city.
It will also subsidise 30 per cent of investment in chip software projects, such as electronic design automation (EDA) tools, up to the ceiling of 100 million yuan.
Do you have questions about the biggest topics and trends from around the world? Get the answers with SCMP Knowledge, our new platform of curated content with explainers, FAQs, analyses and infographics brought to you by our award-winning team.
The same 30 per cent subsidy policy also applies to tape-out - where chips are tested for flaws before they are sent for mass manufacturing - for chips with nodes less than 28-nanometres.
Analysts said the move signalled Shanghai's resolve to help China overcome US sanctions targeting the country's chip industry and would help cement the city's position in the industry.
"The new policy incentive is stronger in amplitude than those in the past," said William Wang, CEO at Shanghai-based consultancy IC Cafe. "It will also help Shanghai to attract and retain [semiconductor] talent to live and work here."
Shanghai is also offering up to half a million yuan in allowances, in addition to housing support, to highly-skilled semiconductor professionals who choose to take up work in the city.
Shanghai is home to China's largest chip foundry, Semiconductor Manufacturing International Corporation (SMIC).
The city's 14th Five Year Plan, announced in March, listed semiconductor and artificial intelligence as two pillars underpinning future technology development in the next five years.
Offering cash subsidies is a common practice for local Chinese governments looking to support semiconductor projects. The effects of subsidies are often mixed, though.
China's semiconductor industry has grown rapidly on strong state support. China's output of ICs, including those produced by local companies and foreign-owned factories, last year reached 359.4 billion units in 2021, up 33.3 per cent year on year, according to data released by China's National Bureau of Statistics (NBS) on Monday.
It marked a significant acceleration from 2020, when China's IC output rose 16.2 per cent to 261.3 billion units.
A report issued by the US-based Semiconductor Industry Association (SIA) earlier this month forecast that China's semiconductor industry could account for 17.4 per cent of global sales by 2024, up from 9 per cent in 2020, if current momentum is maintained.
But Chinese foundries remain years behind global peers such as Taiwan Semiconductor Manufacturing Company (TSMC) and Samsung Electronics, as China is unable to manufacture chips more advanced than 14-nm node. More advanced nodes, such as 5-nm, are used to power the latest smartphone models.
China is also reliant on foreign technology for chip design software. The country's share of semiconductor IP and electronic design automation (EDA) tools is currently estimated to be less than 1 per cent, according to He Weiling, chairwoman at CIP United, an IP supplier and integrated circuit design service company in Shanghai.
US EDA tool companies such as Synopsys, Cadence and Siemens-owned Mentor Graphics currently have a firm grip on the global market.
This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2022 South China Morning Post Publishers Ltd. All rights reserved.
Copyright (c) 2022. South China Morning Post Publishers Ltd. All rights reserved.