The Fifth Session of the 13th National People’s Congress and the Fifth Session of the 13th National Committee of the Chinese People’s Political Consultative Conference (the “Two Sessions”) were held in Beijing as scheduled. From the “Government Work Report” to the proposals of representatives from all walks of life, the semiconductor industry is one of the most important technology topics.
To keep you updated on the key developments in China’s semiconductor industry, this article summarizes the discussions on the development of the semiconductor industry at this year’s Two Sessions and draws out the following four keywords.
In 2021, the global IC industry will continue to be in the predicament of shortage of upstream production capacity and insufficient downstream supply. Although global semiconductor companies continue to expand production capacity, the inflection point of supply and demand balance has not yet been seen in the short term. In this context, the chip industry has received unprecedented attention. At this year’s two sessions, many representatives also put forward suggestions for promoting investment in the semiconductor industry. The overall attitude is to encourage domestically and welcome externally.
Deng Zhonghan, an academic, commander-in-chief of the Starlight China Chip Project, and founder of Vimivro, suggested further expanding the investment scale of the National IC Industry Investment Fund and further accelerating the pace of listing and financing of core chip and vertical innovation enterprises in the “post-Moore era” on the “Science and Innovation Board.”
Tian Yulong, chief engineer and spokesman of the Ministry of Industry and Information Technology, stated: “We should also continue to provide a good policy and market environment for domestic and foreign IC enterprises, treat all kinds of market players equally, give equal treatment to domestic and foreign investors according to the law, especially strengthen the protection of intellectual property rights, jointly promote the innovative development of the IC industry, and maintain the stability of the global IC industry chain and supply chain.”
This year’s “Government Work Report” clearly pointed out that it is necessary to accelerate the development of the industrial Internet, and cultivate and expand digital industries such as integrated circuits and artificial intelligence. The report also proposes to further support China’s localities and enterprises to increase investment in scientific and technological research and development and increase the additional deduction ratio of research and development expenses for technology-based small and medium-sized enterprises from 75% to 100% to stimulate technological innovation.
Zhang Zhanbin, director of the College of Marxism at the Party School of the Central Committee of C.P.C, suggested that new types of infrastructure should be promoted following development needs and industrial potential. Focus on key areas to actively expand new infrastructure application scenarios and explore the planning of sustainable business models.
Independent Control of Chips
Due to the impact of the international trade war and the problem of chip shortage in 2020, the independent control of chips has become a concern for China’s semiconductor industry. Among them, the shortage of serious automotive chip localization issues has been hotly discussed.
Li Biao, a representative of the National People’s Congress and CEO of Hite Group, pointed out that high-quality private integrated circuit enterprises, especially private integrated circuit manufacturing enterprises play an important role in the localization and independent control of chips, which is an important link in China’s integrated circuit industry chain, but also the weakest. The compound semiconductor manufacturing industry meets long build lines and high technical barriers. Some enterprises are in long-term loss and need the government to formulate targeted policies to help.
Zhang Xinghai, a deputy to the National People’s Congress and founder of Xiaokang, said that it is urgent to improve the localization rate of automotive chips and achieve import substitution. National ministries and departments in charge of automotive chips need to develop top-level design and support measures to promote the development of domestic automotive chips.
Chen Hong, a deputy to the National People’s Congress and CEO of SAIC, said that: policy guidance can be used to establish unified technical specifications and standards for vehicle-grade chips, and establish a third-party testing and certification platform; in addition, the government can take the lead in setting up special funds to encourage chip companies and automotive enterprises to participate together to accelerate the formation of domestic large-calculus chip research and development, manufacturing and application capabilities.
Filling the Gap
The industry chain of the semiconductor industry is complex and interlocked. To achieve independent control, China first needs to fill the gaps in the industry to start. This is also one of the topics of concern to the delegates.
Shao Zhiqing, a deputy to the National People’s Congress and a full-time vice chairman of the Shanghai Committee of the Zhigong Party, is concerned about chip materials and suggests building a platform for IC material characterization and testing and application research to provide R&D institutions and enterprises with a “one-stop” solution for material characterization and testing. The combination of process and material development solves the problem of missing application scenarios for IC materials, especially for forward-looking specific materials, providing a total solution that integrates the “material-process-equipment-test” to fill the industry gap.
Following the industrial development trend and the current situation in China, Wang Yu, a member of the National Committee of the Chinese People’s Political Consultative Conference (CPPCC) and a researcher at the Institute of Microelectronics, Chinese Academy of Sciences, suggested that – the development of silicon optical chip industry should be listed as the scope and list of government support. China should encourage and support relevant enterprises, around silicon optical chip design automation, mass production manufacturing, other industry chain gaps, and capital. The country ought to accelerate investment and entrepreneurship, and actively guide local governments to create policy and resources to support and promote the project to take effect. He also points out opening the industrial chain as early as possible, supporting the industry to develop sustainably, and having strong capabilities in negotiations internationally.
China “Chip” Attitude
IC Insights estimates that global semiconductor industry capital expenditures will reach a record high of $190.4 billion in 2022, up a whopping 24% year-over-year. Various regions of the world, such as the European Commission, the U.S. Department of Commerce, and the South Korean government, have provided financial support to semiconductor companies to enhance the competitiveness of the local semiconductor industry. In China, the IC industry is a strategic, fundamental, and pioneering industry that supports the country’s economic and social development, and its importance is gradually gaining more recognition due to the trade war and chip shortages. With the convening of the two sessions this year, China’s next phase of development goals and directions for the IC industry has become clearer. Overall, encouraging the industry’s development and enhancing independence through various means will become the keynote of China’s semiconductor industry next.