China's semiconductor industry receives substantial government backing, SMIC, Huawei top recipients

In Beijing’s concerted efforts to counteract US sanctions on advanced chips, Semiconductor Manufacturing International Corp (SMIC) and Huawei Technologies have emerged as the top beneficiaries of local government funding in China, as reported by the South China Morning Post.

Shanghai, a hub for semiconductor innovation, sees 16 out of 191 major subsidized projects linked to the semiconductor industry, according to city authorities’ data. Notably, SMIC, China’s leading chip maker, features two 300mm production lines currently under construction, while Huawei’s research centre in Shanghai’s Qingpu district is among the 16 projects receiving support.

Focused on semiconductor research and development, wireless networks, and the Internet of Things, Huawei’s facility in Qingpu plans to employ 35,000 researchers upon its anticipated opening in June 2024. Additionally, Shanghai’s funding extends to projects like a production facility by China’s etching equipment firm, Advanced Micro-Fabrication Equipment.

Despite being blacklisted by Washington for national security reasons, Huawei and SMIC have forged ahead with domestic chip production. Last year, Huawei unveiled a 7-nanometer smartphone chip manufactured by SMIC, leveraging older-generation lithography systems from Dutch firm ASML.

Meanwhile, the provincial government of Anhui has pledged increased support for technological breakthroughs in dynamic random-access memory (DRAM) this year, a domain where China is striving to catch up with global leaders such as Samsung Electronics, SK Hynix, and Micron Technology. Hefei, the capital of Anhui province, hosts leading DRAM maker ChangXin Memory Technologies, which achieved a milestone by producing China’s first lower power double data rate 5 (LPDDR5) DRAM chip.

China’s semiconductor industry has received substantial government backing, particularly following US sanctions targeting the sector due to concerns over potential military applications. In 2022 alone, the Chinese government allocated over 12.1 billion yuan (US$1.75 billion) in subsidies to 190 domestically listed semiconductor companies, with SMIC emerging as the largest subsidy recipient, receiving 1.95 billion yuan.

Additionally, Huawei, which recently reclaimed the top spot in China’s smartphone market, reportedly received an estimated US$30 billion in government funding to bolster domestic chip-making infrastructure, according to sources cited in a Bloomberg report.

(With inputs from agencies)