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China cuts taxes to boost semiconductor development

BEIJING (AP) – China on Monday announced tax breaks to boost its semiconductor industry following US sanctions that alarmed the ruling Communist Party by cutting off US processor chips from some tech giant Huawei and some other companies.

Washington officials have said that accelerated efforts to transform China into a self-reliant “technological power” will become a major economic priority this year after the tariff war with Washington, stressing its dependence on US components of smartphones and other emerging Beijing industries.

The Ministry of Finance and other agencies have announced that chipmakers can import cars և raw materials tax-free until 2030. They did not specify how much subsidy the producers could submit.

Over the past two decades, Beijing has made great strides in building the Chinese chip industry, but smartphone makers and other technology makers still rely on the United States, Europe and Taiwan for their leading components.

At that time, President Donald Trump in 2019 suspended Huawei Technologies Ltd.’s access to US processor chips and other technologies in the fight against Beijing’s industrial ambitions.

Last year, Trump toughened the curbs by banning global suppliers from using US technology to make chips for Huawei. It threatens to distort its smartphone business, which was the number one global retailer in early 2020, but has been left out of the top five brands.

Political analysts expect that the US position will change little under President Joe Biden, who replaced Trump in January. Huawei co-founder Ren Heng Yengfei said in February that it was “very unlikely” that the sanctions would be lifted.

Processor chips and other semiconductors are China’s largest import, with more than $ 300 billion a year.

According to the latest measurement, cars և raw materials, “which can not be produced or whose work can not meet demand”, will be exempt from import tax.

According to the statement, this applies to photoresists, masks, abrasive pads, liquids, silicon crystals, waffles, clean rooms, materials for building other production equipment.

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Ministry of Finance of China (Chinese): www.mof.gov.cn

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