Shanghai free-trade zone identifies specialist software as area China can lead in, to offer US$4.3 million in cash subsidies to developers

Shanghai will offer subsidies of as much as 30 million yuan (US$4.3 million) a year to companies developing software used for designing advanced integrated circuits that serve as the brains of everything from electric appliances, smartphones and computers to sophisticated medical equipment, cars and aircraft.

According to analysts, China can catch up with global leaders in electronic design automation (EDA) software development because of a dearth of talent in countries such as the United States. And Shanghai is upping the ante. Through its free-trade zone in Lingang, it will also award buyers of locally developed EDA software up to 2 million yuan in cash annually.

“The cash offered by Shanghai to support EDA developers and users is [being] seen as one of the most substantial and substantive incentives to bolster the chip industry,” said Rich Zhu, an engineer with semiconductor firm Sigmastar Technology. “The policy shows the local government’s vision in focusing on EDA to create an industry chain.”

The incentives will also help Lingang develop into a modern economy on par with regional gateways such as Hong Kong and Singapore.

Analysts said a clutch of domestic industry leaders will benefit from the incentives if they set up shop in the 119.5 square kilometre free-trade zone. These include Beijing-based Empyrean Software and Hangzhou-headquartered Semitronix.

At present, imported EDA software accounts for about 95 per cent of mainland China’s market, with companies such as Mountain View, California-based Synopsys, San Jose, California-based Cadence Design Systems and Mentor, a Wilsonville, Oregon-based subsidiary of Siemens, dominating the sector.