New government policies provide boost to development of the electronic chip industry

Hangzhou government recently launched a series of preferential policies and a nanoelectronics’ research platform to boost development of the integrated circuit industry.

Chinese telecom equipment maker ZTE was forced to suspend its main operations worldwide in mid-April after the US Commerce Department prohibited American companies from exporting products to the business.

That sanction triggered extensive discussions in Hangzhou about the necessity and urgency to develop a reliable chip industry. A range of policies and a platform were then considered in the first step of achieving that goal.

Hangzhou Economy and Information Commission took charge of implementing these policies, which came into effect yesterday. They consist of 14 terms, regarding subsidy, talent attraction and tax.

According to the policies, a project that invests more than 3 million yuan (US$443,700) in the research and development of microchips could be subsidized up 20 percent of the investment.

In addition, the government will offer financial support of up to 35 million yuan to a company that invests more than 50 million yuan on chip innovation and technological reforming.

If an innovative chip has been applied widely and reached an application scale beyond 5 million yuan, it could receive a grant of up to 3 million yuan.

In order to provide hi-tech companies with ample capital in the research and development fields, the government requires local banks to give preferential interest rate on loans. Meanwhile, a tax refund process is also simplified.

“These policies are the strongest ever to support the industry, covering all aspects of chip designing, making and application, treating all scales of companies equally,” said Xia Jiliang, director of Hangzhou Economy and Information Commission. “Before launching the policies, the commission visited Fujian, Hubei and Jiangsu provinces to draw experience from their chip industries. Our polices are believed to be more preferential because we hope to attract companies from other cities.

“Government departments will give priority to projects with power to drive the development speed of the local chip industry when allocating subsidies.”

All of the policies are expected to support the newly built nanoelectronics’ research platform, which is established under the cooperation of Qingshan Lake Nanoelectronics Smart Town in Lin’an District, CETHIK Group and China Sensor Network International Innovation Center.

The platform is hoping to assist hi-tech companies in testing and manufacturing chips with an aim of sharing technological resources and accelerating development speed of the chip technology. It is located in Qingshan Lake Nanoelectronics Smart Town, and based on a Magnetic Random Access Memory system of CETHIK Group.

Covering an area of 40 square kilometers, the town is one of Hangzhou’s high-tech industry hubs. It enjoys a series of preferential policies from both Hangzhou and Zhejiang Province governments.

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Policy advantages make it ideal to develop the chip industry. Thus far, the town has attracted around 21 projects with a total investment of 6.3 billion yuan.

To encourage integrated circuit innovation, the town provides forward-thinking companies with financial support of up to 3 billion yuan. Except for ordinary rent and housing subsidies, professionals could get up to 6 million yuan of financial assistance on development, investment, equity funds and bank loans. As for startup incubators, they could get less than 5 million yuan on venue decorations and up to 2 million yuan on operation facilities.

Both companies and their projects must go through a series of assessments from the town’s management commission before they are approved of subsidies.

“Most local companies are small and lack capital and talent for further development. We need the government’s support to compete with our counterparts from other provinces. 

The new policies will help us solve key issues,” said Yin Ming from Hangzhou Zhongke Microelectronics Co, a chipmaker in satellite-based navigation technology. “Though Hangzhou has a better foundation with a couple of industrial leading companies, it needs a boost to development since rivals have also speeded up lately.”

A favorable living environment and convenient transportation are indispensable elements to allure hi-tech talent and organizations. Now, the town has 18 top-notch experts and 2,600 professionals, housing 55 national-level enterprises and 700 small-scale companies.

Last year, Lin’an was announced as the 10th district of Hangzhou and a Metro line has been planned to connect it with downtown Hangzhou. Three expressways and a light rail system are also under construction to link it with Xiaoshan International Airport, Shanghai and Jiangsu Province.

Meanwhile, local education and medical systems will be ameliorated to provide talent with quality living standards. Apartments are also under building to solve the housing problems.