The Next Silicon Valley

China unveils boost to chipmakers in latest war salvo

China has unveiled major tax incentive policy to encourage innovation in domestic semiconductor industry.

For chip design, packaging, testing and relevant equipment, materials and software enterprises, the first two years of profits will be tax exempt.

Shanghai’s STAR market has been the preferred venue for China’s chip makers, with SMIC raising 53 billion yuan (US$7.58 billion) in July

BUT, some analysts have cast doubt over whether the policies will have a major impact in helping China’s chip industry.

MEANWHILE: Beijing has been pouring money into portions of the semiconductor industry since the 2014 establishment of the National IC (integrated circuit) Investment Fund, with so far only incremental success. That is because the sector is highly globalized, competitive, and market driven, and companies need more than cash to compete,” to Paul Triolo, head of the geo-technology practice at Eurasia Group, told CNBC.



Expert Industry Source:

The Coming Chip Wars

A version of this article appeared in War on the Rocks.

Controlling advanced chip manufacturing in the 21st century may well prove to be like controlling the oil supply in the 20th. The country that controls this manufacturing can throttle the military and economic power of others.The United States just did this to China by limiting Huawei’s ability to outsource its in-house chip designs for manufacture by Taiwan Semiconductor Manufacturing Company (TSMC), a Taiwanese chip foundry. If negotiations fail, China may respond and escalate, via one of many agile strategic responses short of war, perhaps succeeding in coercing the foundry to stop making chips for American companies – turning the tables on the United States.Short of war, there would be no obvious way to get those foundries back. Without them, the U.S. defense and consumer electronics industries will be set back at least five years — and because China has its own advanced chip foundries, it could become the world leader in technology for the next decade or more.Here’s why.  And how they may do it.And why the world just got a lot more dangerous.
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