China set to launch chip subsidy fund, says report

MII regulation document No. 18 expired on April 1, the report said, and referenced MII insiders saying the replacement regulations would give subsidies to some semiconductor companies subject to approval by regulators. A subsidy fund of between 100 million and 200 million yuan would be distributed this year, the report said.

The subsidies would be subject to approval from The National Development and Reform Commission (NDRC) with regard to manufacturing companies and from the MII with regard to chip design companies. The Ministry of Finance would control the total amount of subsidies issued, the report said.

Under the threat of being taken before the World Trade Organization China backed down over a value added tax rebate that favored chips made in China but said at the time that the VAT rebate was canceled that it would seek to support its chip industry in other ways.

It is possible that subsidies provided to individual companies by the state would also contravene China's commitments to the WTO.