SHANGHAI — The semiconductor business in China is abuzz over the huge chunk of money China's central and local governments are about to plunk down on the domestic chip industry.
The combined investments over the next 10 years range from $20 billion to $200 billion, according to the word on the Chinese street. The story has countless versions, each with a different sum of money, leading skeptics to wonder if all the talk is just a matter of Chinese bravado, if not an urban legend.
But based on EE Times interviews with a dozen insiders -- ranging from entrepreneurs and investors to the CEOs of fabless chip companies in Shanghai and Shenzhen and well established industry officials in Beijing -- the government commitment to the semiconductor industry appears to be real. The planned investment, combining contributions from the central and local governments, is likely to be $10 billion to $15 billion per year, starting in 2015. Some say it might be stretched over 10 years, others say five.
Among variations on the story, there's one common element on which everyone seems to agree.
The new investment in China's semiconductor industry will be distinctly different from Beijing's top-down order in 2000 to "encourage the development of the IC industry in China."
Known as Policy No. 18, the 2000 directive reportedly launched a network of state-owned technology incubation centers throughout China. The policy had some positive effects, but never really succeeded in generating a star semiconductor company able to compete with counterparts in the West.
Rather than expecting the government to dictate which IC industry sectors should get investment money, the idea that has gained consensus among locals today is to "set up a fund" and let professional investors place bets on which Chinese entities -- fabless, foundries, and/or research institutes -- deserve the funding. Moreover, the overseers of such investment would not be the government, but investors, who would demand tangible results and a real return on their investments, sources said.
As one fabless chip company CEO put it, the very idea of "letting the private sector play" in making investment decisions illustrates a budding shift in China's economic structure -- slowly transitioning from the planned model to a more market-driven economy.
While the government has so far made no announcement about actual dollars and cents, China's renewed commitment to IC technology is "public" and "clear," several industry sources pointed out.
Prime Minister's report
A case in point is the Prime Minister's "government work report" issued just this month. The Prime Minister, who represents the State Council, talks about last year's achievements in managing the country and this year's work plan. The report's release is regarded in China as one of the most significant events of the National People's Congress and Chinese People's Political Consultative Conference, an annual national meeting held in late February or early March.
In this year's report, Prime Minister Li Keqiang specifically mentioned "integrated circuits," in the context of "using innovation to support and lead economic structural improvement and upgrading."
More specifically, in the report, he said:
We will build a platform for supporting business startups and innovation in emerging industries. We will strive to catch up with and overtake advanced countries in areas of new-generation mobile communications, integrated circuits, big data, advanced manufacturing, new energy and new materials, and to guide the development of emerging industries.
For outsiders, especially in the West, this sounds like Beijing boilerplate, designed to pay lip service to high-tech industries in China.
But insiders in China see substance here.
Next page: What if China buys Imagination?