China trails US in government support for domestic chip industry, according to new report
- China’s nascent chip industry needs more than direct subsidies and tax holidays to flourish, researchers at China’s leading investment bank found
- The US remains a leading global supplier of semiconductors, while China is in a “relatively backward position”, said analyst
The Chinese government is not doing enough to prop up its domestic chip industry compared with the United States, according to a new report by China’s top investment bank.
“If we compare each government’s support for the semiconductor industry, the support provided by the US is still more than what China has provided,” said Peng Wensheng, chief economist and head of the research department at China International Capital Corp (CICC), during an online media briefing on Tuesday.
While Beijing has already showered the country’s semiconductor projects with generous incentives such as direct subsidies and tax holidays, CICC researchers found that Washington has “played an important role in technology innovation” by providing financial support at the early stage.
China is determined to strengthen its technological self-reliance as it grapples with a fierce rivalry with the US, as well as a global chip shortage. As part of its 14th five-year plan, Beijing aims to increase its spending on basic scientific research, including on semiconductors, to 8 per cent of the country’s total research and development expenditure.
The US is currently the world’s leading supplier of semiconductors, accounting for nearly 40 per cent of the global market, said Peng Hu, principal analyst of the technology and semiconductor sector at CICC. China, on the other hand, is a major consumer of semiconductors, contributing to more than 20 per cent of global demand.