China is working on a $143 billion support package for its semiconductor industry. Reuters, citing three sources, said the plans were being made to counter U.S. moves aimed at a major step toward self-sufficiency in chips and slowing its technological progress.

It is set to be one of Beijing’s biggest fiscal stimulus packages in five years, the sources said. The move is aimed at boosting semiconductor manufacturing and research activities at home, mainly through subsidies and tax credits.

According to analysts, the demand for such sophisticated chips is increasing due to the advancement of technology in the current world. China wants to seize this opportunity to be in a stronger position to shape the future of its industry. Because such chips have become the hot cake of geopolitics due to increasing demand. And Beijing regards this industry as the base of its technological power.

The plan could be implemented as early as the first quarter of next year, two sources told Reuters on condition of anonymity.

Most of the financial support will be used to subsidize the purchase of domestic semiconductor equipment by Chinese firms, mainly semiconductor fabrication plants or fabs, they said.

Such companies will be entitled to a 20 percent subsidy on the purchase cost, three sources said.

The financial aid plan comes after the US Commerce Department passed a sweeping set of regulations in October that could restrict access to advanced AI chips by research labs and commercial data centers, among other restrictions.

The US is also lobbying some of its partners, including Japan and the Netherlands, to tighten exports to China of equipment used to make semiconductors. US President Joe Biden signed a landmark bill in August providing $52.2 billion in grants for US semiconductor manufacturing and research, as well as an estimated $24 billion worth of tax credits for chip plants.

With the stimulus package, Beijing plans to increase support for Chinese chip firms to build, expand or modernize domestic facilities for manufacturing, assembly, packaging and research and development.

Beijing’s latest plan also includes preferential tax policies for the country’s semiconductor industry, the sources told Reuters.

(Dhaka Times / 13 December / SAT)