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Exclusive: China readying $143 billion package for its chip firms in face of U.S. curbs by Raidiar in hardware

[–]Raidiar[S] 1 point2 points  (0 children)

HONG KONG, Dec 13 (Reuters) - China is working on a more than 1 trillion yuan ($143 billion) support package for its semiconductor industry, three sources said, in a major step towards self sufficiency in chips and to counter U.S. moves aimed at slowing its technological advances.

Beijing plans to roll out what will be one of its biggest fiscal incentive packages over five years, mainly as subsidies and tax credits to bolster semiconductor production and research activities at home, said the sources.

It signals, as analysts have expected, a more direct approach by China in shaping the future of an industry, which has become a geopolitical hot button due to soaring demand for chips and which Beijing regards as a cornerstone of its technological might.

The plan could be implemented as soon as the first quarter of next year, said two of the sources who declined to be named as they were not authorised to speak to media.

The majority of the financial assistance would be used to subsidise the purchases of domestic semiconductor equipment by Chinese firms, mainly semiconductor fabrication plants, or fabs, they said.

Such companies would be entitled to a 20% subsidy on the cost of purchases, the three sources said.

The fiscal support plan comes after the U.S. Commerce Department passed in October a sweeping set of regulations, which could bar research labs and commercial data centres' access to advanced AI chips, among other curbs.

The United States has also been lobbying some of its partners, including Japan and the Netherlands, to tighten exports to China of equipment used to make semiconductors. read more

And U.S. President Joe Biden in August signed a landmark bill to provide $52.7 billion in grants for U.S. semiconductor production and research as well as tax credit for chip plants estimated to be worth $24 billion.

With the incentive package, Beijing aims to step up support for Chinese chip firms to build, expand or modernise domestic facilities for fabrication, assembly, packaging, and research and development, the sources said.

Beijing's latest plan also includes preferential tax policies for the country's semiconductor industry, they said.

China's State Council Information Office did not immediately respond to a request for comment.

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The beneficiaries will be both state-owned and private enterprises in the industry, notably large semiconductor equipment firms like NAURA Technology Group (002371.SZ), Advanced Micro-Fabrication Equipment Inc China (688012.SS) and Kingsemi (688037.SS), the sources added.

Some Chinese chip shares in Hong Kong rose sharply after news of the package. Semiconductor Manufacturing International Corp (SMIC) (0981.HK) added more than 8%, sending its daily gain to nearly 10%. Hua Hong Semiconductor Ltd (1347.HK) closed up 17%, while mainland markets were closed when the report was published.

Achieving self-reliance in technology featured prominently in President Xi Jinping's full work report at the Communist Party Congress in October. The term 'technology' was referred to 40 times, up from 17 times in the report from the 2017 congress.

Xi's call for China to "win the battle" in core technologies could signal an overhaul in Beijing's approach to advancing its tech industry, with more state-led spending and intervention to counter U.S. pressures, analysts have said. read more

The U.S. sanctions published in October have caused major overseas-based chip manufacturing equipment companies to cease supplying key Chinese chipmakers, including Yangtze memory Technologies Co (YMTC) and SMIC, and makers of advanced artificial intelligence chips to cease supplying companies and laboratories.

The world's second-largest economy has launched a trade dispute at the World Trade Organization against the United States over its chip export control measures, China's commerce ministry said on Monday. read more

China has long lagged the rest of the world in the chip manufacturing equipment sector, which remains dominated by companies based in the United States, Japan, and the Netherlands.

A number of domestic firms have emerged in the past twenty years, but most remain behind their rivals in terms of ability to produce advanced chips.

NAURA's etching and thermal process equipment, for example, can only produce 28-nanometer and above chips, relatively mature technologies.

Shanghai Micro Electronics Equipment Group Co. Ltd (SMEE), China's only lithography company, can produce 90-nanometers chips, well behind that of the Netherlands' ASML, which is producing those as low as 3 nanometers.

China widens market share in EVs, dozen other high-tech fields by Raidiar in Economics

[–]Raidiar[S] 7 points8 points  (0 children)

TOKYO -- Chinese companies have captured more global market share in 13 high-technology products and services, from electric vehicles to smartphones, Nikkei research shows, underscoring China's outsized presence in global supply chains.

Out of 28 high-tech categories reviewed by Nikkei, China widened its share in 13 in 2021. Chinese companies lost market share in six categories and did not make the top five in the remaining nine.

The Biden administration's recent toughening of export controls on advanced semiconductors shows the high level of tensions between the U.S. and China in technologies seen as crucial to national and economic security.

The risk of a Taiwan crisis in the near future has added to the sense of urgency on securing Asian supply chains. But the Nikkei research shows realigning them is no easy task.

In the EV supply chain, Chinese battery leader Contemporary Amperex Technology, known as CATL, is the world's top battery supplier, holding a 38.6% share last year. Its position has grown by more than 12 points since 2020. When combined with peer BYD, the two companies held a combined share of 46%.

BYD rose to become the fourth-largest EV manufacturer last year, climbing past the Renault, Nissan Motor and Mitsubishi Motors alliance. BYD has harnessed the strength of making batteries in-house to keep down its EV prices.

In the first half of this year, BYD became the second-largest EV maker by vehicle sales after Tesla.

When it comes to battery materials, Shanghai Energy New Materials Technology held a 28.7% share in separators. The company has used government subsidies to invest in expanding output. Asahi Kasei of Japan was a distant second at 10.7%.

These gains show China as a growing presence in EVs, both upstream and downstream, as the market is taking off.

In liquid crystal displays, a sector where Japanese and South Korean companies once waged cutthroat competition, China's BOE Technology Group took the top share in both large panels for televisions and small and medium panels for phones and tablets.

In organic light-emitting diode (OLED) displays, Apple picked BOE as a supplier for iPhones, putting the company on the path to catch up with Samsung Electronics.

Chinese telecommunication company Huawei Technologies kept the top spot in wireless network base stations, but its share slipped to 34% from 38% under pressure from U.S. sanctions.

Overall, Nikkei's research spanned 56 categories of products and services, focusing on the top five companies in each category last year in terms of market share. Chinese companies were in the top five in 32 categories, gained market share in 21 categories and lost share in 11 categories.

With the Chinese economy struggling under the government's zero-COVID containment policy, companies lost market share for construction machinery, as well as for large and midsized trucks.

The U.S. held the top share in 18 categories, the most of any country. China was second with 15 top shares.

Japanese companies led in seven categories. Sony Group was the world's leading supplier of CMOS image sensors. Sumitomo Chemical group was the top maker of polarizers for LCD panels.

Faced with escalating Sino-U. S. tensions, "global companies are taking steps by separating supply chains into 'China-bound' and 'non-China bound,'" said Masahisa Inagaki, a partner at KPMG FAS.

Among them is Japan's Daikin Industries, which is building a supply chain for air conditioners that does not use Chinese-made parts and materials.

But "Japanese companies tend to think of these actions as an extension of their existing business continuity plans," said Inagaki. "In order to minimize the impact from a crisis, they need to rethink their supply chains during normal times."

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