Caixin (August 6) reported that on July 27, China’s State Council issued new rules to bolster the country’s integrated circuit and software industries in support of the push to expand and upgrade domestic chip-making capacity. The new rules outline tax incentives including as many as 10 years of tax exemptions for qualified integrated circuit makers. They also encourage companies to raise funds from share sales. The cabinet pledged to streamline the review procedure for integrated circuit and software companies’ domestic listings. The cabinet also encouraged private capital to set up funds to support the industries, pledged financing support to companies and vowed to enhance intellectual property protection. Caixin also reported that “Under the State Council’s new policy, qualifying [integrated circuit] projects and enterprises that have operated for more than 15 years will be exempt from corporate income tax for as many as 10 years if they employ the 28 nanometer (nm) chipmaking process…while projects from 65 nm to 28 nm can qualify for five years tax free and a 50% discount on the corporate tax rate for the subsequent five years.” It said “China’s biggest chipmaker, Semiconductor Manufacturing International Corp. (SMIC), and Hua Hong Semiconductor Ltd. are the only two companies that can produce chips using the 28 nm process” and“SMIC’s Shanghai-listed shares closed up 2.37% Wednesday after a jump of as much as 7.3% intraday. The company’s Hong Kong-listed shares rose nearly 5%.” It said “Other semiconductor companies that can benefit from the new policy include Unic Memory, SK Hynix Semiconductor China Ltd. and Hangzhou Silan Microelectronics Co. Ltd.”

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