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China will establish a 120 billion yuan chip industry support fund.
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2014.07.11
The chip industry related to information security has been elevated to a national strategic level. Recently, China Securities Journal learned that the country will invest heavily to support the development of the integrated circuit industry. A national-level chip industry support fund of 120 billion yuan is expected to be announced soon. Analysts say that with the backing of national funds, companies involved in the equipment, design, manufacturing, and packaging of integrated circuit chips are expected to experience rapid growth.
Corporate operation
Currently, China imports more than 190 billion US dollars worth of integrated circuit chips annually, comparable to oil imports. How to break free from external dependence and gradually achieve domestic substitution is a top priority for the localization of information technology in China. According to China Securities Journal, the government has completed the 'Outline for Promoting the Development of the Integrated Circuit Industry', which clearly supports the development of the integrated circuit industry through both fiscal support and equity investment funds.
An industry insider admitted that funding has become the main bottleneck restricting the development of the integrated circuit industry. 'In the past decade, China's integrated circuit industry has invested over 100 billion yuan in technology, but compared to international giants, domestic investment across the entire industry is only one-sixth of Intel's.' He stated that the importance and necessity of capital in promoting the development of the integrated circuit industry have been recognized, and it is considered an effective means to operate through government fiscal guidance combined with equity investment funds.
The aforementioned insider revealed that under this guiding thought, the national chip industry support fund is expected to be announced soon, with a scale reaching 120 billion yuan. The national fiscal allocation will be 40 billion yuan, while the remaining funds will rely on social fundraising.
'Currently, several central enterprises are expected to become initiators of this fund, including powerful companies such as China Tobacco, mobile operators, and chip packaging firms. The fund will adopt corporate operation and specialized management, focusing on supporting sub-sectors such as equipment, design, manufacturing, and packaging of integrated circuit chips.'
'The establishment of a 120 billion yuan industrial support fund will exceed ten years of R&D investment. This will significantly narrow the gap in capital investment in the chip industry compared to developed countries,' said the aforementioned insider.
Analysts believe that the trend towards domestic chip production is irreversible, and related funding investments are expected to achieve geometric growth. Against this backdrop, breakthroughs in core technologies and localization will enter a peak period. Chips in important fields such as cloud computing, IoT, big data, and digital television are expected to achieve import substitution. Along the industrial chain, companies involved in equipment, design, manufacturing, and packaging of integrated circuit chips are expected to experience rapid growth.
Many regions are creating local version funds.
The ripple effect of chips is very significant. According to estimates by the International Monetary Fund, every yuan of chip output can drive ten yuan in related electronic information industries and contribute one hundred yuan to GDP, which positively impacts local employment and economic transformation.
In fact, even before the national team was formed, various regions had already begun creating local versions of equity investment funds for the chip industry to foster the development and growth of the integrated circuit industry. Following Beijing's announcement at the end of last year to establish a 30 billion yuan equity investment fund for building the integrated circuit industry, cities like Wuhan, Shanghai, Shenzhen, Hefei, Anhui, and Shenyang have also accelerated their efforts.
An experienced industry insider stated that local version funds will also play a guiding role for government funding by expanding channels for venture capital funds and encouraging institutional investors, industrial capital, and overseas capital to participate in forming development funds for the integrated circuit industry. On one hand, these funds will support collaborative development across various segments of the integrated circuit industry chain through equity investments; on the other hand, they will promote mergers and acquisitions among key enterprises and construction of industrial parks. This will undoubtedly benefit internationally renowned leading companies like HiSilicon, Spreadtrum, SMIC, and JCET.
Industry insiders say that the introduction of 'national version' support policies will undoubtedly have an important demonstration and driving effect on local support policies. In 2014, multiple regions will introduce semiconductor industry development plans along with related investment attraction and support policies while establishing relevant industrial development funds.
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