Friday , July 20 2018

China cuts taxes for chipmakers to promote industry development

Bloomberg

China said it cut taxes for semiconductor makers, lending new support for the pivotal industry just as US President Donald Trump weighs tariffs on the sector amid rising trade tensions.
The new rules cover a broad swath of semiconductor companies. They will be exempt from corporate income taxes for up to five years starting from January 1, the
Finance Ministry said in a statement. Tax rates after that will then be half of the current 25 percent through the 10th year.
The tax breaks follow tax cuts announced Wednesday to benefit high-end manufacturing and innovation-driven technology companies supported by the Made in China 2025 plan: a blueprint for the Asian nation to sharpen competitiveness in emerging industries from information technology to aerospace.
Beijing has long tried to elevate its chip sector. China wants to reduce a reliance on some $200 billion of annual semiconductor imports, which it fears undermines national security and hampers the development of a thriving technology sector. The country envisions spending about $150 billion over 10 years to achieve a leading position in design and manufacturing, an ambitious plan that US executives and officials warn could harm American interests.
While officials have suggested their initial vision of attaining a global lead may be unrealistic, the government remains intent on finding ways to reduce imports as the world’s largest consumer of semiconductors. For starters, a key Chinese government fund is said to be aiming to raise as much as $32 billion to invest in homegrown chip companies and accelerate
its ambition of building a world-class semiconductor industry.

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