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China Gave 190 Chip Firms US$1.75 billion in Subsidies in 2022

From SCMP . . . . . . . . .

The Chinese government doled out more than 12.1 billion yuan (US$1.75 billion) in subsidies to 190 domestically listed semiconductor companies in 2022, industry data shows, as Beijing seeks to counter escalating US sanctions targeting advanced chip-making.

The 10 largest recipients received 45 per cent of the payouts, amounting to 5.46 billion yuan, according to a report on Sunday from Chinese media outlet ijiwei, which compiled the data from Wind, a financial data provider. Corporate filings from the top 10 firms confirms the subsidy amounts.

The report only covered companies listed in mainland China, meaning either in Shanghai or Shenzhen. Many other unlisted firms have also received government support, including through loans and direct investment.

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China’s largest foundry operator, Semiconductor Manufacturing International Corp (SMIC), was also its largest subsidy recipient for the year at 1.95 billion yuan.

The only other company to be given more than 1 billion yuan was Sanan Optoelectronics, an LED chip maker based in the southeastern city of Xiamen, which received 1.03 billion yuan.

Shaanxi-based chip packaging company Tianshui Huatian Technology came in third with subsidies of 467.1 million yuan.

Among the other top 10 recipients are Wingtech Technology, an Apple supplier that develops and manufactures chips and mobile terminals; Naura Technology, a Beijing-based chip equipment maker and supplier of US-sanctioned Yangtze Memory Technologies Co (YMTC); and Loongson Technology, a flagship CPU designer. Each received subsidies ranging from 100 million yuan to 400 million yuan.

However, subsidy amounts varied greatly depending on the company, with those ranked at the bottom receiving around 200,000 yuan for the year – less than US$30,000.

The numbers show how companies have benefited from China’s drive to step up self-sufficiency in semiconductors amid a heightened tech war with the US.

Last October, the US Bureau of Industry and Security, under the Commerce Department, expanded the scope of its export control rules to further restrict Chinese chip makers’ access to tools, software and US talent, in a bid to cap China’s advanced chip-making capabilities. These include restrictions on logic chips at the 16-nanometre level or more advanced and 3D NAND memory with 128 layers or more.

Two months later, the Commerce Department added more than 30 Chinese chip companies, including YMTC, to the so-called Entity List, which restricts the export of US products and services to China without Washington’s approval.

Since late last year, a number of municipal governments in China – including Chengdu in southwestern Sichuan province, Nanjing and Suzhou in eastern Jiangsu province, as well as Guangzhou and Shenzhen in southern Guangdong province – have answered the Beijing’s call to boost the development of the country’s integrated circuit industry by setting aside millions or billions of yuan in subsidies.

Suzhou alone promised to foster the development of 10 “leading innovative companies” and add three more listed firms to its local semiconductor ecosystem this year.

Meanwhile, some unlisted and Hong Kong-listed firms have received significant financial support from local and central authorities.

In late February, YMTC, China’s top memory chip maker, received US$7 billion in fresh funding from a group of state-backed investors, including the National Integrated Circuit Industry Investment Fund, known as the “Big Fund”.

Hong Kong-listed Hua Hong Semiconductor, China’s second-largest chip foundry, also received state backing for its US$6.7 billion wafer fabrication plant in eastern Wuxi city, according to its stock exchange filing in January.

Source : Yahoo!

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China’s Aircraft Carriers Play ‘Theatrical’ Role But Pose Little Threat Yet

Greg Torode, Eduardo Baptista and Tim Kelly wrote . . . . . . . . .

When China sailed one of its two active aircraft carriers, the Shandong, east of Taiwan last month as part of military drills surrounding the island, it was showcasing a capability that it has yet to master and could take years to perfect.

As Beijing modernizes its military, its formidable missile forces and other naval vessels, such as cutting-edge cruisers, are posing a concern for the U.S. and its allies. But it could be more than a decade before China can mount a credible carrier threat far from its shores, according to four military attaches and six defence analysts familiar with regional naval deployments.

Instead, China’s carriers are more of a propaganda showpiece, with doubts about their value in a possible conflict with the U.S. over Taiwan and about whether China could protect them on longer-range missions into the Pacific and Indian oceans, the attaches and analysts told Reuters.

China’s Defence Ministry did not respond to questions about its carrier program, though dozens of articles in state-linked journals reviewed by Reuters reveal awareness among Chinese military analysts about shortcomings in the country’s carrier capability.

While some regional press coverage, partially based on Chinese state media reports, portrayed recent drills around Taiwan as active patrols and a military challenge to the U.S. and its allies, the Chinese carriers are effectively still in training mode, eight of the experts said.

Landing of aircraft at night and in bad weather, for instance – crucial to regular offshore carrier operations – remain far from routine, several of the attaches and analysts said.

And in a conflict, China’s carriers would be vulnerable to missile and submarine attacks, some of the experts said, noting the People’s Liberation Army Navy (PLAN) has not perfected protective screening operations, particularly anti-submarine warfare.

“Unlike other parts of their military modernisation, there is something politically theatrical about their carrier deployments so far,” said Trevor Hollingsbee, a former British naval intelligence analyst.

“Carrier operations are a very complicated game, and China’s got to figure this out all by itself. It still has a long, long way to go.”

At times, China’s carrier pilots have relied on land-based airfields for takeoffs or landings, as well as for extra air cover and surveillance, the attaches told Reuters on the condition of anonymity as they were not authorised to speak publicly.

And though China’s Liaoning and Shandong carriers have each sailed into the western Pacific in recent months, approaching U.S. bases on Guam, they remained within range of coastal Chinese airfields, according to Rira Momma, professor of security studies at Takushoku University’s Institute of World Studies, who reviewed Japanese defence ministry tracking data.

Both the Liaoning – a refitted ex-Soviet vessel – and the Chinese-built Shandong have jump ramps for take offs, which limit the number and range of aircraft on board.

Anti-submarine helicopters operate from both carriers and China’s Type 055 cruisers but the carriers have yet to deploy an early warning aircraft, relying so far on land-based planes, the 10 experts said.

A new plane, the KJ-600, designed to perform a similar role to the E-2C/D Hawkeye launched from U.S. carriers, is still in testing, according to the Pentagon’s latest annual report on China’s military.

FROM SKI JUMPS TO CATAPULTS

As the Liaoning and Shandong gradually increase the tempo of their drills, China is preparing for sea trials of its next-generation carrier, the 80,000-tonne Fujian, state media reported last month. The Fujian is significantly larger, though conventionally powered, and will launch aircraft from electromagnetic catapults.

The ship, which the Pentagon report said could be operational by 2024, is expected to carry new variants of the J-15 jet fighter, replacing the existing model that foreign analysts consider underpowered.

“The Fujian, with its more modern capabilities, will be just another test bed for a good few years,” said Collin Koh, a defence scholar at Singapore’s S. Rajaratnam School of International Studies.

“It won’t be until we see the next generation of carriers that the Chinese designs and the PLAN’s intentions will really settle down.”

The carrier program reflects the ruling Communist Party’s aim of making the People’s Liberation Army (PLA) a “world class” military by 2049, part of President Xi Jinping’s vision of building “a great modern socialist country”.

One indication of China’s ambitions, the attaches said, will be if carriers built after the Fujian are nuclear-powered like U.S. ones, allowing global range.

A study published in December by the non-partisan U.S. Congressional Research Service noted that China would use its carriers to project power “particularly in scenarios that do not involve opposing U.S. forces” and “to impress or intimidate foreign observers”.

Several countries operate aircraft carriers but the U.S. remains the most dominant, running 11 carrier battlegroups with global reach.

China, by contrast, could use its carriers primarily in the Asian theatre, working in tandem with submarines and anti-ship missiles to attempt to control its near seas.

The Shandong’s appearance off Taiwan’s east coast to stage mock strikes last month surprised some analysts, given the island’s proximity to land-based airfields. But, in the short term at least, China’s military would struggle to defend the carrier out in the western Pacific in a clash with U.S. and allied forces.

“China’s objective with the deployment of the Shandong is clear, it is a symbol of its political anger” over U.S. engagement with Taiwan, said Yoji Koda, a retired admiral who commanded the Japanese fleet.

In a battle, he said, it “would be a very good target for U.S. and Japanese forces, and they would take it down at the very beginning.”

A U.S. defence official, speaking on the condition of anonymity as they were not authorised to talk publicly, said while China had made progress with its carriers, it had yet to master operations in difficult conditions or how to protect the vessels.

One question was how the ships would be relevant in a conflict, the official said.

HOPES AND SHORTCOMINGS

Chinese military and government researchers appear aware of the challenges, according to a Reuters review of over 100 recent articles published in dozens of publicly available Chinese defence journals.

The official PLA Daily in October published an interview with an aircraft carrier aviation unit where the deputy chief of staff, Dai Xing, acknowledged “many shortcomings in preparing for war”, and a gap between sailors’ training level and combat requirements.

A September editorial published in a magazine run by a PLA weapons manufacturer, titled “Four great advantages the PLA has in attacking Taiwan”, did not mention the role of Chinese carriers. Instead, it said, China’s land-based ballistic missiles would be enough to overwhelm potential intervention from U.S. carriers.

Two earlier editorials in the same publication, Tank and Armoured Vehicle, noted that China’s carriers would remain in their infancy for the foreseeable future and that other surface ships would be more useful in a conflict in the East China Sea.

Other articles in similar publications outline pilot recruitment and training problems, vulnerabilities to submarine attack and command issues – which some foreign analysts say is a problem for a navy that still sails with political commissars with executive authority.

When at sea, U.S. carriers fly almost constantly, routinely operating fighter, electronic-warfare and surveillance aircraft to create a protective screen around the battlegroup.

Beyond the expense and danger of such operations, one key element is mastering devolved command systems, particularly in a crisis such as a fire or crash onboard when planes are airborne and the flight deck is disabled.

The U.S. has spent decades perfecting such systems, having expanded carrier operations after their importance was highlighted in the Allied victory over Japan in the Pacific in World War Two.

“The continuous operation of its carriers sits at the very core of what makes the U.S. military absolutely preeminent,” said Singapore-based defence analyst Alexander Neill, an adjunct fellow with Hawaii’s Pacific Forum think tank.

In the medium term, China is likely to start sending battlegroups into the Indian Ocean, where China’s presence is minimal beyond routine submarine operations, the attaches and defence analysts said.

Operating far from the security of land-based airfields would test China’s capability, but preparations are underway.

The pier at China’s first major offshore military base in Djibouti was recently extended, and could now fit a carrier, the Pentagon report noted.

Source : Reuters

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