Hear the Core Voices of the Semiconductor Industry at the Two Sessions

    2014 In that year, integrated circuits made their way into government reports. In 2018, events related to the integrated circuit industry came into the public spotlight, sparking a nationwide surge in enthusiasm for developing this sector. As a result, numerous discussions emerged about how to advance the development of integrated circuits. Representatives at the Two Sessions have been actively offering suggestions and strategies on how to swiftly optimize industrial layouts and strengthen China’s integrated circuit industry. Next, let’s take a look at what voices the semiconductor industry has raised during this year’s Two Sessions.

     In this year’s Government Work Report, the Premier pointed out that we must enhance our capacity to support scientific and technological innovation. We should provide stable support for both basic research and applied basic research, and guide enterprises to increase their R&D investments. We will accelerate the establishment of national laboratories, restructure the national key laboratory system, and foster the development of social R&D institutions. We will also deepen international scientific and technological cooperation, strengthen intellectual property protection, and implement a “listing-and-command” approach for tackling key projects—whomever is capable should be given the opportunity to take charge.

    In implementing the strategy of expanding domestic demand and accelerating the transformation of the economic development model, the report points out the need to expand effective investment. Specifically, this includes planning to allocate 3.75 trillion yuan in special local government bonds this year—an increase of 1.6 trillion yuan over last year—and raising the proportion of special bonds that can be used as project equity capital. Additionally, central budgetary investment is set at 600 billion yuan. 100 million yuan. We will focus on supporting the “Two New, One Heavy” initiatives—new infrastructure and new urbanization—that both boost consumption, benefit people’s livelihoods, and adjust the economic structure to enhance long-term growth momentum. Specifically, this includes strengthening the construction of new infrastructure, developing next-generation information networks, and expanding 5G coverage. Apply, build charging stations, promote new-energy vehicles, stimulate new consumer demand, and boost industrial upgrading.

     In addition, representatives from all over the country have also put forward various suggestions:

     Hu Chengzhong, Chairman of the Board of Directors of Delixi Group and a deputy to the 13th National People's Congress, put forward a proposal on building China into a global leader in the chip industry and driving high-quality economic development. He pointed out: “Currently, our country has placed great importance on promoting the development of the integrated circuit industry and has achieved some notable results. However, to achieve rapid breakthroughs, we must demonstrate even greater determination, pool stronger collective efforts, and carry forward the spirit of struggle exemplified by the ‘Two Bombs and One Satellite’ program. We must overcome all difficulties and obstacles, grit our teeth and address our shortcomings head-on, and wholeheartedly build China into a global powerhouse in the chip industry, thereby leading the way toward high-quality economic development.” To this end, he made the following recommendations:

     First, we must leverage the complementary strengths of government guidance and market mechanisms. Developing the chip industry carries both strategic and economic significance. To this end, we need to establish a robust collaborative system involving coordinated efforts among the government, industry players, academia, and various social forces. At the national level, we should set up a dedicated agency equipped with leaders who can take a holistic view, formulate scientifically sound plans, coordinate resource allocation, manage technological R&D, foster industrial chain synergy, and provide targeted policy support. Following the ZTE and Huawei incidents, driven by patriotic enthusiasm, enthusiasm for developing the chip industry has surged across China. However, there is also a risk of a rush to enter the field without proper planning, leading to redundant construction and inefficiencies. Therefore, it is essential to have a top-level national leadership body that can carry out comprehensive strategic planning and coordinated deployment for the chip industry, thereby preventing waste of resources and fraudulent claims for subsidies.

     Second, we must pool greater resources to tackle key technological challenges. Chip development is a tough and arduous battle characterized by high technological barriers, substantial investment risks, and long payback periods. In the short to medium term, the economic benefits may not be obvious, and there is even a relatively high likelihood of losses. On China’s integrated circuit industry chain, design, raw materials, and packaging & testing segments are largely dominated by small and medium-sized enterprises, which generally lack the strength needed to support continuous product iterations. To develop advanced integrated circuits and break through critical technological bottlenecks, it remains essential for the government to organize concentrated efforts by pooling technical expertise, mobilizing manufacturing enterprises, research institutions, and universities to participate jointly, and ensuring sustained investment of financial and human resources. At the same time, we must continuously optimize talent policies, attract global industry talent, accelerate domestic talent cultivation, build up robust technological capabilities, and strive to achieve breakthroughs—from mere imitation to genuine innovation— at an early date.

     Third, fully leverage the role of the private economy. China’s well-developed private economy boasts solid capital accumulation. In the course of navigating the turbulent waters of the market economy, it has developed an investment style characterized by “high risk and high returns,” thereby laying a robust grassroots foundation for the development of China’s high-tech industries. We should rationally guide private capital into the chip industry, allocating more resources to key areas and weak links in integrated circuits. Fully harnessing the advantages of private enterprises—such as their flexible institutional mechanisms and relatively fewer foreign regulations—we should encourage them to pursue mergers and acquisitions of chip companies overseas, support their efforts to bring in high-tech projects, and enable them to play a leading role in driving the development of the chip industry.

     Fourth, we must promote the innovative application of domestically produced chips across various sectors. The chip industry serves as a powerful driver for the development of diverse industries. We need to fully leverage the computing and storage capabilities of chips to lead industries in their transformation and upgrading. Relevant authorities should formulate guiding opinions on the deep integration of integrated circuits with the real economy, accelerate the implementation of chips in fields such as manufacturing, transportation, agriculture, and healthcare, and inject new momentum into the development of various types of chips through market applications. We should introduce targeted policies to encourage domestic substitution. For critical departments and key industries, we must explicitly require the gradual adoption of domestically produced chips throughout entire systems; enterprises that choose to use domestically produced chips will receive favorable fiscal and tax incentives and rewards. We should support manufacturers across various industries in forging deep collaborations with chip companies—through cross-shareholding and capital ties—to align interest mechanisms and actively participate in chip research, development, and commercialization. Chip companies should proactively engage with downstream enterprises, striving to provide differentiated, customized, and cost-effective chips and supporting solutions tailored to the specific needs of each industry, thereby creating greater value for manufacturing, services, and other related sectors.

     In addition, the proposal to establish integrated circuits as a first-level discipline has been put forward again this year (a related proposal was also made last year). Last year, several regions already began planning for the development of integrated circuits as a first-level discipline. For example, in December last year, Fudan University designated “Integrated Circuit Science and Engineering” as a first-level doctoral-degree-granting discipline and plans to launch a pilot program in 2020, beginning enrollment of doctoral students.

     According to a report by China Electronic News, Hao Yue, a member of the National Committee of the Chinese People's Political Consultative Conference and an academician of the Chinese Academy of Sciences, stated in an interview that the establishment of integrated circuits as a first-level discipline should be incorporated into the nation’s unified evaluation system and discussed within the framework of national discipline development and management. In terms of discipline development, both foundational courses and practical components should be given equal weight to achieve a dual enhancement in both the quantity and quality of talent.

     Hao Yue pointed out that Fudan University’s establishment of the first-level discipline of “Integrated Circuit Science and Engineering” is a highly meaningful initiative. To promote both the quantity and quality of China’s integrated circuit talent, the establishment of this first-level discipline should be incorporated into the nation’s unified evaluation system and discussed within the framework of national discipline development and management. At the same time, regarding how to delineate the first-level discipline of integrated circuits and how to integrate it reasonably into the existing education system, we should extensively draw on the experiences and lessons learned from various countries in cultivating integrated circuit talent, while taking practical considerations into account, so as to foster integrated circuit talent in a systematic and high-quality manner.

     Hao Yue stated that there are two key areas that need to be strengthened in current integrated circuit talent development. First, it is essential to build a robust system of foundational courses. In particular, we must ensure that core and fundamental courses such as microelectronics, physics, and mathematics have sufficient class hours and appropriate content, enabling them to be taught to students in a systematic and comprehensive manner. Second, we need to enhance the practicality of these courses and mobilize the strengths of various stakeholders—including universities and enterprises—by establishing integrated circuit talent-development platforms such as specialized training bases.

     In addition, at the time of the 2020 Two Sessions of the National People's Congress, the Central Committee of the China Association for Promoting Democracy also submitted a proposal titled “On Promoting the Scientific Development of China’s Power Semiconductor Industry.” The proposal suggests further refining policies to support the development of the power semiconductor industry; including the research and development of new materials for power semiconductors in the national plan, carrying out comprehensive deployment, making every effort to seize strategic advantages, and achieving independent supply of power semiconductor chips as soon as possible.

     In its proposal, the Central Committee of the China Association for Promoting Democracy recommends further refining policies to support the development of the power semiconductor industry and accelerating the realization of independent supply of power semiconductor chips. At the same time, it calls for intensified scientific and technological research into new materials for power semiconductors and inclusion of the R&D of these new materials in the national plan. “Currently, the markets for silicon carbide and gallium nitride are still in their early stages, and the gap between domestic Chinese manufacturers and established overseas giants is relatively small. As a result, Chinese companies have good prospects for overtaking their competitors by leveraging their advantages in local market applications.”