China Allots $143-B For Chip Firms Crippled By U.S. Curbs

China is working on a more than 1 trillion yuan ($143 billion) support package for its semiconductor industry, three sources said, in a major step towards self-sufficiency in chips and to counter US moves aimed at slowing its technological advances, Julie Zhu reported for CNN.

Photo Insert: China is decades away from developing technology that fabricates advanced 3-nanometer chips, which are a joint monopoly of the US and the Netherlands.

Beijing plans to roll out what will be one of its biggest fiscal incentive packages over five years, mainly as subsidies and tax credits to bolster semiconductor production and research activities at home, said the sources.

It signals, as analysts have expected, China’s direct role in shaping the future of an industry, which has become a geopolitical hot button due to soaring demand for chips, which Beijing regards as a cornerstone of its technological might.

China is decades away from developing technology that fabricates advanced 3-nanometer chips, which are a joint monopoly of the US and the Netherlands, Josh Horwitz and Brenda Goh also reported for CNN Business.

The plan could be implemented as soon as the first quarter of next year, said two of the sources who declined to be named as they were not authorized to speak to media.

The majority of the financial assistance would be used to subsidize the purchases of domestic semiconductor equipment by Chinese firms, mainly semiconductor fabrication plants, or fabs, they said.

Such companies would be entitled to a 20% subsidy on the cost of purchases, the three sources said. The beneficiaries will be both state-owned and private enterprises in the industry, notably large semiconductor equipment firms like NAURA Technology Group, Advanced Micro-Fabrication Equipment Inc. China, and Kingsemi, the sources added.

The fiscal support plan comes after the US Commerce Department passed in October a sweeping set of regulations, which could bar research labs and commercial data center access to advanced AI chips, among other curbs.

The US has also been lobbying some of its partners, including Japan and the Netherlands, to tighten exports to China of equipment used to make semiconductors.

And, US President Joe Biden in August signed a landmark bill to provide $52.7 billion in grants for US semiconductor production and research as well as tax credit for chip plants estimated to be worth $24 billion, Jason Xue, Kevin Huang, and Xu Jing also reported for CNN.

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