The China government has been offering tax incentives to promote the development of its semiconductor industry since the implementation of its 12th five-year economic development plans in 2011.
Under the encouragement of the policy, the number of IC design houses in China grew from about 500 in 2010 to 632 by the end of 2013. However,a number of new IC design companies set up during the three-year period were mostly small-scale operators without much competitiveness. The promotion of industry mergers and acquisitions thus has become a major policy formation for the IC design industry in China recently.
To accelerate the industry integration, China's State Council has promulgated recently a set of "National Semiconductor Industry Development Guidelines" laying out the goals for its IC industry for 2015, 2020 and 2030.
To meet these goals, China's central government will set up a CNY120 billion (US$19.32 billion) national industry investment fund to finance the build-up of advanced manufacturing processes as well as the mergers and acquisitions within the IC industry.
With the support of the investment fund, China will be able to see its production capacity for 12-inch wafers increase significantly, the number of mergers among its domestic IC companies surge, and more China-based IC companies launch plans to acquire foreign semiconductor firms, Digitimes Research believes.
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