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Consolidation expected in China's semiconductor industry, says Digitimes Research
Press release [Wednesday 10 August 2011]

During China's 12th Five Year Plan (FYP), the State Council has set out six policies to further the development of the software and semiconductor industries: strengthening investment and financing, expanding support for research and development, implementing tax incentives, improving measures to train and attract talent, strict enforcement of protections for IP rights, and market regulation to maintain order, says a new DIGITIMES Research Special Report titled "Expectations for China's semiconductor industry during the 12th Five Year Plan."

While the local semiconductor industry has received long-term support as one of China's strategic industries since the 9th Five Year Plan (FYP) in 1996, it was expected to receive less attention when it was specifically included in the seven new strategic industries in State Council Rule 32 (2010) only as one part of the infrastructure for the next generation IT industry. This was a warning sign that its importance to China's development and economic growth may be declining. However, the Executive Meeting of the State Council convened on January 12, 2011 concluded that the software and semiconductor industries were new national strategic industries, as well as vital foundations for the creation of an information-based society in China, the report explains.

Analyzing the various measures in the six policy areas, DIGITIMES Research finds that all the measures relating to fund raising for semiconductor firms, including the direct investment of funds by the central government, support for major state projects, and tax breaks on business tax and corporate income tax, involve direct funding or tax support from the government, or even the creation of venture capital funds for investing in the semiconductor industry and promoting mergers between companies; it is also evident that the government is investing its own resources through both direct and indirect methods. All this shows that promoting mergers between firms in the China semiconductor industry is a key direction for government policy.

For more information about the report, visit Digitimes Research.

State Council's six major measures to develop the software and semiconductor industries, announced on January 12, 2011

Policy

Details

Strengthen investment fund raising support

(1) Investment from central government budgets in eligible semiconductor firms and technology R&D
(2) Support corporate restructuring and mergers
(3) Establish equity or venture capital investment funds
(4) Promote the use of IP rights and other intangible assets as loan collateral in order to expand financing channels for companies

Strengthen support for research and development

(1) Use major national projects to support key technology R&D for the semiconductor industry
(2) Set up strategic alliances involving cooperation between academia and industry

Put tax incentives in place

(1) Give business tax and corporate income tax incentives to eligible businesses

Enhance measures to develop and recruit talent

(1) Improve the bonus system for researchers
(2) Encourage eligible higher education institutions and semiconductor firms to jointly establish semiconductor research institutions
(3) Expedite the recruitment of high-level talent from overseas

Strictly implement measures to protect IP rights

(1) Crack down on all forms of IP violations in accordance with the law
(2) Support companies that submit patent applications overseas in accordance with the law

Strengthen regulations to maintain market order

(1) Strengthen anti-monopoly measures
(2) Improve import/export support policies

Source: Digitimes Research, July 2011

About DIGITIMES Research

DIGITIMES Research is the research arm of DIGITIMES Inc., Taiwan's leading high-tech media outlet. Operating as an independent business unit, DIGITIMES Research focuses on monitoring key high-tech industries, while also guiding clients toward suitable new business as well. Market intelligence and analysis is provided to more than 1,000 corporate customers worldwide. Research and consulting services cover a full range of industries, including information and communications technology (ICT), flat panel display (FPD), renewable energy and semiconductor design and manufacturing.

Contacts

Michael McManus (Michael.mcmanus@digitimes.com)
Shannen Yang (Shannen.yang@digitmes.com)

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