"China is formulating a semiconductor industry support plan worth over 1 trillion yuan." Since early last year, news of the Chinese government's massive subsidies for the chip industry has been circulating.

At that time, it was announced that it planned to launch its ****** fiscal incentive plan within five years, mainly subsidies and tax credits. Most of the financial aid will be used to subsidize Chinese semiconductor manufacturers or wafer fabs in purchasing semiconductor equipment to support domestic semiconductor production and research and development. The plan will be implemented as early as the first quarter of next year. In mid-2023, although no further subsidy policies have been released at the national level, tax authorities have provided preferential information.

On May 6th, the Ministry of Finance and the State Administration of Taxation issued a notice on the policy of adding and offsetting value-added tax for integrated circuit enterprises. From January 1, 2023 to December 31, 2027, integrated circuit design, production, testing, equipment, and material enterprises (hereinafter referred to as integrated circuit enterprises) are allowed to deduct 15% of the current deductible input tax amount to offset the payable value-added tax amount (hereinafter referred to as the additional deduction policy).

Relatively speaking, the support from local governments is greater and more direct. According to incomplete statistics from Cyber Automotive, 10 provinces and cities including Beijing, Shanghai, Shenzhen, Jiangsu, Chongqing, and Zhejiang have released chip related support policies since the beginning of this year.

Among them, Chengdu City in Sichuan Province has received strong financial support. According to local policies, enterprises will be given comprehensive support of no more than 500 million yuan at 10% of fixed assets investment. At the technical level, EDA tool technology is the most focused area of attention.

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This includes: fully supporting the upgrading and development of the integrated circuit industry, continuously strengthening investment support, and providing up to 5 million yuan of financial support to integrated circuit design enterprises with actual investment of over 20 million yuan at a ratio of 12%; Provide up to 20 million yuan of interest subsidy support to integrated circuit manufacturing, packaging and testing enterprises with actual investment of over 500 million yuan; For integrated circuit equipment and material enterprises with actual investment of over 200 million yuan, a maximum of 10 million yuan in interest subsidy support will be provided. Subsequently, Shenzhen followed suit.

On January 16th, the Development and Reform Bureau of Bao'an District, Shenzhen issued a draft of "Several Measures to Promote the Development of Semiconductor and Integrated Circuit Industry in Bao'an District, Shenzhen (for soliciting opinions)", which plans to provide up to 20 million yuan in subsidies to key semiconductor and integrated circuit projects determined by experts and enterprises engaged in integrated circuit EDA tool software research and development.

The above measures focus on supporting the design of high-end general-purpose chips, specialized chips, and core chips; Manufacturing of silicon-based integrated circuits; Manufacturing of high-end electronic components; Advanced packaging and testing technologies such as wafer level packaging, 3D packaging, and chiplets; Development and application of EDA tools and key IP core technologies; Advanced equipment and key component production for photolithography, etching, ion implantation, deposition, and detection equipment; And the research and industrialization of core semiconductor materials.

On January 19th, the Jiangsu Provincial Government also issued a notice on several policies to further promote the high-quality development of the integrated circuit industry, providing up to 20 million yuan in subsidies to eligible merger and acquisition enterprises.

In addition, Jiangsu Province encourages and supports localization in the construction of integrated circuit public service platforms and domestic EDA cloud service platforms. Priority is given to the use of independently controllable EDA tools, IP cores, and testing and verification equipment to build domestic EDA services and testing and verification environments, providing common key technical support and professional services for integrated circuit enterprises. Provincial special funds are selected annually to provide support.

On January 20th, Hefei, Anhui Province issued the Implementation Rules for Several Policies Supporting the Development of Software and Integrated Circuit Industry in Hefei Economic and Technological Development Zone, supporting integrated circuit enterprises that meet the requirements to apply for settlement in Hefei Economic and Technological Development Zone.

The support methods include a maximum of 5 million yuan in household registration rewards, decoration subsidies, rental subsidies, upgrading rewards, research and development subsidies, vehicle certification subsidies, equity financing rewards, pilot policies for free trade zones, and support for industrial talent cultivation and introduction. On April 25, the starting area of new and old kinetic energy conversion in Jinan, Shandong Province issued nine policies of China Core, which will support the introduction of key projects in the chip field. After demonstration, 20% of fixed assets investment (excluding land costs) will be subsidized, with a maximum of 25 million yuan.

According to this policy, the starting area will cultivate and strengthen the main body of the chip industry. Support the introduction of key projects. For manufacturing projects with a total investment of 50 million yuan or more and less than 500 million yuan, such as smart sensors, IGBT (power chip), MUC (master chip), new display chips and other chip manufacturing, packaging testing, equipment, materials and other fields, after demonstration, 20% of the fixed assets investment (excluding land costs) will be subsidized, with a maximum of 25 million yuan. The above-mentioned new projects with a total investment of over 500 million yuan shall be implemented in accordance with the "Several Policies on Promoting Enterprise Development in Jinan New and Old Energy Conversion Starting Zone".

On June 2nd, Chengdu, Sichuan Province released the "Implementation Rules for Several Policies to Accelerate the High Quality Development of the Integrated Circuit Industry in Chengdu". In terms of attracting major projects, the "Implementation Rules" proposed that for major integrated circuit manufacturing, packaging and testing, equipment, and materials projects with a total investment of 500 million yuan or more, based on their technical products, process level, and market prospects, etc, Comprehensive support of no more than 500 million yuan will be given to enterprises based on 10% of fixed assets investment.

In addition, special attention is paid to the design process. The Implementation Rules propose that enterprises engaged in the research and development of integrated circuit IP cores and EDA tools shall be granted a maximum subsidy of 5 million yuan at a rate of 20% of research and development expenses. For integrated circuit design enterprises that purchase IP cores, EDA tools, and testing equipment for chip research and development, a subsidy of up to 2 million yuan will be given at a rate of 50% of the purchase cost; For integrated circuit design enterprises that have completed the first round of full mask engineering product assembly, a maximum annual subsidy of 10 million yuan will be given to a single enterprise based on 50% of the key support direction assembly cost and 30% of the non key support direction assembly cost

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Release of relevant construction guidelines, looking forward to more standardization in the chip industry

In addition to financial subsidies, many regions have also released guidelines and action plans for chip related construction.

On January 7th, the Zhejiang Provincial Department of Economy and Information Technology issued the "Zhejiang Province Integrated Circuit Industry Chain Standard System Construction Guidelines (2022 Edition)", which pointed out that in the next three years, we will focus on developing compound semiconductor manufacturing facility construction standards and energy consumption standards, standardize product category standards in the fields of memory chips, microcontrollers, analog-to-digital conversion chips, and specialized integrated circuit chips, and formulate various integrated circuit design rules and design tool specifications, And the standards for the entire process of subsequent production, manufacturing, packaging testing, and product application. At the same time, scientific research institutions and enterprises are encouraged to fully play the main role of standard formulation (revision), increase investment in standardization work, and enhance the ability of standard development.

On January 16th, the "Three Year Action Plan for Breakthrough Development of Optoelectronic Information Industry in Hubei Province (2022-2024)" was released, proposing to promote key breakthroughs in integrated circuits and other fields, drive the development of software and information technology services, new generation information communication and other related fields. For example, in the field of integrated circuits, relying on leading enterprises such as Wuhan Xinxin, Gaode Infrared, and Guangxun Technology, as well as innovation platforms such as Jiangcheng Laboratory, etc, Build a distinctive integrated circuit industry cluster. By 2024, the electronic information industry in the province, characterized by optoelectronic information, aims to exceed one trillion yuan in scale,

On the same day, Shanghai released a list of 191 major construction projects in 2023, with multiple key chip manufacturing projects prominently listed. Mainly including the SMIC 12 inch chip project, SMIC Lingang 12 inch wafer foundry production line project, Jita Semiconductor characteristic process production line project, ultra silicon semiconductor 300mm integrated circuit silicon wafer fully automatic intelligent production line, Geko Semiconductor 12 inch CIS integrated circuit research and industrialization project, and other projects directly related to integrated circuit production and research and development, covering upstream material and equipment manufacturing end, as well as downstream electronics and rail transit Important fields such as defense have a huge demand for domestically produced chips.

On January 31st, Beijing also released a report on the implementation of the Beijing 2022 National Economic and Social Development Plan and the 2023 National Economic and Social Development Plan, which pointed out that Beijing will continue to improve the development level of high-end manufacturing in 2023, enhance the development momentum of new generation information technology, strengthen the construction of important integrated circuit research and development industry projects, achieve the second phase of Xiaomi's intelligent factory production, and start construction of BOE's Beijing 6th generation line. We will carry out technological breakthroughs in key areas such as basic software and industrial software, and support the research and development of a number of key software products through methods such as "unveiling and leading".

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Not only China, but also many countries around the world in the field of chip enhancement

In recent years, China has maintained attention and support for chip companies.

According to Wind data statistics, the Chinese government provided subsidies of over 12.1 billion yuan (approximately 1.75 billion US dollars) to 190 A-share semiconductor listed companies in 2022. Among them, the top 10 Chinese semiconductor listed companies with the highest subsidy amount received a total of 45% of the subsidy, which is 5.46 billion yuan.

SMIC, a Chinese wafer manufacturer, is a beneficiary of ******, receiving a subsidy of up to 1.95 billion RMB in 2022. The second ranked LED manufacturer is Sanan Optoelectronics from Xiamen, Fujian, which received a subsidy of 1.03 billion yuan. Ranked third is Shaanxi chip packaging company Tianshui Huatian Technology, which received a subsidy of 467.1 million yuan.

The other top ten semiconductor companies are Wentai Technology, Huacan Optoelectronics, Northern Huachuang, Chujiang New Materials, Cambrian, Sanhuan Group, and Longxin Zhongke, with subsidies ranging from 196 million to 389 million yuan. In addition, more than 180 other companies received an average subsidy of about 200000 RMB in 2022.

In fact, not only China, but also with the increasing popularity of communication products and the further intelligent electrification of automobiles, the global demand for chips is constantly increasing, and countries are increasing subsidies for chips.

As early as the end of 2021, the Indian government announced a $10 billion plan to encourage companies to produce chips in India.

In August 2022, the United States passed the Chip and Science Act, providing a total of over $50 billion in financial subsidies to the semiconductor industry. It also brings the global "chip war" into a new stage.

Since the beginning of this year, countries such as South Korea, Japan, and the European Union have also proposed relevant subsidies.

Among them, Japan announced the revised "Semiconductor and Digital Industry Strategy", proposing to triple the domestic sales of semiconductors and digital industries to the current target of over 15 trillion yen by 2030, and requested the Japanese government and private sector to invest an additional approximately 10 trillion yen; The South Korean government has decided to select 100 future core technologies and invest 160 trillion Korean won to ensure that South Korea maintains its advantage in the semiconductor and other fields; The EU has approved a plan worth 43 billion euros aimed at enhancing the competitiveness of the EU semiconductor industry.

In addition, the UK has recently released a national semiconductor strategy proposing to invest £ 1 billion to enhance the UK's strength in chip design and research and development, while encouraging local chip companies to develop.

It can be foreseen that the global chip war will become even more intense in the future, and after a series of real gold and silver bombings, the global chip market pattern will also be rewritten.