BEIJING: China’s finance ministry said yesterday it has introduced tax breaks for chipmakers in the country, at a time when the government is seeking to reduce dependence on foreign semiconductors amid trade tensions with the US over technology transfers.
The move comes as the US is considering imposing tariffs on $50 billion worth of Chinese exports, citing discriminatory trade practices in high-tech sectors, including semiconductors.
Chipmakers will be exempt from corporate taxes for two to five years followed by partial deductions, the ministry said.
The exemptions cover a range of products, from very basic to cutting-edge chips, for use in computers, smartphones and other electronic devices.
The new rules are effective from January 1, 2018.
China relies heavily on foreign semiconductors, which make up one of its largest import categories by value. It is seeking to overtake foreign rivals and become a top semiconductor producer by 2030, according to its own roadmap.
Companies producing high-end chips using 65 nanometre technology or smaller with an investment of over 15 billion yuan ($2.39bn) will be exempt from corporate taxes for five years.
Companies producing chips using 130 nanometre technology or smaller will be tax exempt for two years.