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SCMP: China’s push to boost local chip industry could backfire by creating excess capacity

Wed August, 2020, Age: 3 years

The Chinese government last week published a long list of incentives to encourage domestic semiconductor development and production, including a maximum 10-year tax holiday for some manufacturers. Apart from tax holidays, it also promised government funding support, fast tracks to initial public offerings, as well as easy access to bank credit. The new regulations come as China is trying to be self-sufficient as it prepares for a long-term economic, technological, and geopolitical rivalry with the United States. However, like many of Beijing’s well-intentioned industrial policies, support for the semiconductor industry could also lead to wasteful spending and excess capacity.

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