Tech war: southwestern tech hub Chengdu offers US$72 million in subsidies to local semiconductor projects amid China’s chip self-sufficiency drive

The subsidies form part of 12 new policies unveiled this week by Chengdu’s municipal government to support the city’s semiconductor sector

It reflects a broader trend among local governments across China to pursue programmes in line with Beijing’s chip self-sufficiency drive

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Chengdu’s subsidies for its semiconductor sector will cover major projects in chip manufacturing, packaging and testing, equipment and materials. Illustration: Shutterstock

Ann Caoin Shanghai

Published: 7:30pm, 10 Mar 2023

The municipal government of Chengdu, China’s inland electronics and technology hub, is offering up to 500 million yuan (US$72 million) in subsidies to local semiconductor companies for major chip projects, as more cities answer the central government’s call to boost development of the country’s integrated circuit (IC) industry amid a tech war with the US.

Local authorities in Chengdu, capital of southwestern Sichuan province, unveiled the subsidies on Thursday as part of 12 new policies to support the local semiconductor sector, according to a report by the official Chengdu Daily.

The subsidies will cover “major projects in integrated circuit manufacturing, packaging and testing, equipment and materials”, according to the report, citing the announcement made by the city’s Economic and Information Technology Bureau.

Under the new policies, certain “top talent” in the local semiconductor sector can receive an annual award of 500,000 yuan plus a one-off award of 3 million yuan, while each of the teams they are a part of can get 15 million yuan in financial support.

An aerial view of Chengdu, capital of southwestern Sichuan province. Photo: Shutterstock

Chengdu’s semiconductor sector recorded total revenue of 51.6 billion yuan last year, up 17 per cent from 2021, which marked a major achievement after US chip giant GlobalFoundries closed its joint venture factory in the city in 2020.

Days before Chengdu’s announcement, local authorities in the Jiangbei New District of Nanjing, capital of eastern Jiangsu province, announced a programme that offers up to 20 million yuan in subsidies to semiconductor firms in the city, according to a People’s Daily report.