Shenzhen’s central business district offers chip-making incentives, with millions in subsidies for new projects

Futian district, on the border of Hong Kong, is offering semiconductor companies research and development subsidies and up to 60 per cent off of rent

Policies from the district in China’s southern tech hub align with the central government’s push for chip self-sufficiency in the face of US sanctions

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Shenzhen’s Futian central business district seen on July 8, 2022. Photo: AFP

Published: 6:30pm, 7 Jun 2023

The central business district of the southern Chinese tech hub of Shenzhen has announced new measures to support semiconductor companies that range from cheaper rent to cash subsidies worth up to 10 million yuan (US$1.4 million), as part of the central government’s pursuit of technological self-sufficiency amid an escalating rivalry with the US.

Futian district, on the border of Hong Kong, is offering new semiconductor companies up to 60 per cent off market rental rates for government properties, according to a policy document released on Tuesday. For companies leasing from private landlords, the government can cover half of the rent or offer a subsidy of up to 8 million yuan per year for three years.

Cash aid under the plan covers multiple segments of the semiconductor supply chain, including chip design, testing and tape-out, the final result of the design process that means integrated circuits are ready for production.

One provision allows companies that achieve full mask tape-out for the first time to receive subsidies of 30 per cent or up to 10 million yuan of research and development costs related to the tape-out. It also offers 20 per cent or up to 2 million yuan for firms working on tape-out for multi-project wafer services, which allow designs from multiple customers to be produced on a single wafer.

Companies developing electronic design automation tools or other intellectual property (IP), such as designs that can be licensed to other firms, can receive a maximum of 5 million yuan in subsidies. Companies purchasing such materials are also eligible for subsidies covering 20 per cent of those costs or up to 3 million yuan.

Chip projects that the Shenzhen municipal government views as developing or supporting “core technology breakthroughs” are also eligible for up to 3 million yuan in subsidies.

The push to promote local semiconductor production is part of Futian’s new scheme supporting what the central government has identified as “strategic emerging industries”, which include biopharmaceuticals and information technology services.

Semiconductors have become a particular flashpoint, however, as Washington has steadily increased export restrictions on advanced chips and chip-making equipment.