Summary analysis of the "14th Five-Year Plan" development ideas of the integrated circuit industry in the Yangtze River Delta region

Home News Trends Summary analysis of the "14th Five-Year Plan" development ideas of the integrated circuit industry in the Yangtze River Delta region

2022-03-17 230

China Business Intelligence Network News: Integrated circuits are called the "heart" of electronic products. The integrated circuit industry is the core of the current information technology industry. It is also a strategic, basic and leading industry that supports the country's economic and social development and ensures national security. The Yangtze River Delta region is an important area for the development of integrated circuits in my country. The 14th Five-Year Plan outlines of the three provinces and one city in the Yangtze River Delta region all lay out the integrated circuit industry.

1. Development status of China’s integrated circuit industry

1. Policies support the development of the integrated circuit industry

An integrated circuit is a miniature electronic device or component. The integrated circuit industry is the foundation of the information technology industry. It is a strategic, basic and leading industry that supports the development of the national economy and ensures national security. Its degree of development is one of the core indicators of a country's scientific and technological development level and affects the process of social informatization. Therefore, it is strongly supported by governments of various countries. The Chinese government has identified the integrated circuit industry as one of the strategic industries and has promulgated a series of policies and regulations to highly support the development of the integrated circuit industry.

In 2019, the Ministry of Finance and the State Administration of Taxation jointly issued the "Announcement on Corporate Income Tax Policies for the Integrated Circuit Design and Software Industry", proposing that legally established and qualified integrated circuit design companies and software companies will have a preferential period starting from the profit-making year before December 31, 2018. The first to second years will be exempted from corporate income tax, and the third to fifth years will be levied a corporate income tax at a statutory rate of 25% at a half rate, and will enjoy it until the expiration of the period.

In 2020, the State Council issued "Several Policies to Promote the High-Quality Development of the Integrated Circuit Industry and Software Industry in the New Era" to further optimize the development environment of the integrated circuit industry and software industry, deepen international cooperation in the industry, enhance industrial innovation capabilities and development quality, and formulate policies and measures in eight aspects including finance and taxation, investment and financing, research and development, import and export, talent, intellectual property, market application, and international cooperation.

Data source: Compiled by China Business Industry Research Institute

2. The market scale of China’s integrated circuit industry is expanding.

Driven by factors such as stable economic growth, favorable policy support, and huge market demand, China's integrated circuit industry has achieved rapid development. According to statistics, from 2016 to 2020, calculated in terms of sales, the scale of the integrated circuit market in mainland China increased from 435.55 billion yuan to 884.80 billion yuan. It is expected that the scale of the integrated circuit market in mainland China will reach 988.26 billion yuan in 2021.

Data source: Compiled by Frost & Sullivan and China Business Industry Research Institute

3. There is huge room for substitution of domestically produced integrated circuits in China.

In recent years, the integrated circuit industry in mainland China has developed rapidly, but it is still unable to meet the rapidly growing market demand. A large number of integrated circuit products still rely on imports. According to statistics, mainland China's integrated circuit imports reached US$350 billion in 2020. During the same period, mainland China's integrated circuit exports were US$116.6 billion, with a trade deficit of US$233.4 billion. Demand continues to rise. From this point of view, there is still huge room for domestic substitution of integrated circuits.

Data source: Compiled by China Semiconductor Industry Association and China Business Industry Research Institute

2. Development status of the integrated circuit industry in the Yangtze River Delta region

1. The Yangtze River Delta region has become an important area for the development of integrated circuits in my country.

The Yangtze River Delta region has attracted domestic and foreign investment due to its unique geographical location, national and local policy support, a relatively complete industrial chain, a reasonable integrated circuit industry structure, and abundant industrial talents, and has maintained a momentum of rapid development.

Data source: Compiled by China Business Industry Research Institute

The Yangtze River Delta region is the most important integrated circuit development and production base in China and occupies an important position in the domestic integrated circuit industry. According to data from the National Bureau of Statistics, the proportion of integrated circuit output in the Yangtze River Delta region fluctuated from 2015 to 2020, but overall remained at around 50%.