China is promoting semiconductor development with tax cuts
China is promoting semiconductor development with tax cuts

China announced tax cuts Monday to support the development of the semiconductor industry. Previous US sanctions shocked the ruling Communist Party by preventing the tech giant Huawei and other companies from accessing US processor chips.

The leaders of the two countries have announced that they will intensify their efforts to transform China into an independent technological powerhouse, which will be the top economic priority this year. Previously, the tariff war with Washington highlighted the use of American smartphones and American components in other industries that Beijing wants to develop.

The Treasury and other agencies have announced that chip makers will be able to import duty-free machinery and raw materials before 2030, not to mention the support they will provide to manufacturers.

Beijing has invested a lot of money building a chip industry in China over the past two decades, but smartphone manufacturers and other technology manufacturers still rely on the United States, Europe and Taiwan to provide the most advanced components.

Former US President Donald Trump suspended Huawei's access to US processor chips and other technologies in 2019 in a battle against Beijing's industrial ambitions.

Last year, Trump tightened restrictions by preventing global suppliers from using US technology to make chips for Huawei.

This could hinder the Huawei smartphone business. Huawei was the world's best-selling smartphone company in early 2020, but has withdrawn from the top 5 brands.

Political analysts expect the position of the United States to change slightly under the leadership of US President Joe Biden, who succeeded Trump in January.

Huawei founder Ren Zhengfei said in February this year that the likelihood of sanctions lifting is very small.

Semiconductors and processor chips are China's largest imports, with a total annual volume of more than 300 billion US dollars.

According to the government, under the latest procedures, machinery and raw materials that cannot be manufactured or whose performance does not meet the demand are exempt from import duties.

The announcement states that this applies to photoresists, masks, pads, polishing fluids, silicone crystals, foils, materials used in the construction of cleanrooms and other production facilities.

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