context: Beijing is seeking to increase state support while avoiding further inflating already worrisome investment bubbles. The new tax exemptions last longer and cover less advanced tech than similar measures from August 2020, so that benefits for the semiconductor industry will reach beyond SMIC (which is on the US's radar). Growing global demand may already result in semiconductor shortages.
Semiconductor and software firms are exempted from income tax for
- ten years for
- factories producing chips smaller than 28 nanometres with an operating period over 15 years
- five years (after making a profit) for
- factories producing chips smaller than 65 nanometres with an operating period over 15 years, and half of the 25 percent statutory tax during the next five years, and ten percent thereafter
- key integrated circuit design companies and software companies encouraged by the state
- two years (after making a profit) for
- factories producing chips smaller than 130 nanometres and an operating period over ten years, and 25 percent for the next three years
- integrated circuit design, equipment, materials, packaging, testing and software firms, and half of the 25 percent rate for the next three years
Next, says Li Ke 李珂 China Semiconductor Industry Association secretary general, MoF (Ministry of Finance) will extend support for up- and downstream firms in the high-end semiconductor supply chain.
'Notice on corporate income tax policy for promoting integrated circuit and software industries' was issued by NDRC (National Development and Reform Commission), SAT (State Administration of Taxation), MoF and MIIT (Ministry of Industry and Information Technology)