CHINA
Shanghai Issued Regulations for Recognizing and Rewarding Innovative Enterprise Headquarters
On February 22, 2023, Shanghai Development and Reform Commission and other local authorities
jointly issued Administrative Measures for Recognizing and Rewarding Innovative Enterprise
Headquarters, stipulating several measures to be taken to identify, reward and support headquarters
(HQs) of innovative enterprises.1
The regulations took effect on March 1, 2023, running to February 29,
2028.
Integrated circuit (IC) design and manufacturing enterprises (subject to the conditions as listed below)
are eligible to apply for recognition as innovative enterprise HQs.
• Application Requirements: To officially be recognized as innovative enterprise HQs, generally, an
applicant company must meet the following standards:
o The applicant should be a Shanghai-registered company in the industrial sector or the services sector
(as discussed IC design and manufacturing fall into such scope), with total assets reaching RMB 200
million (approx. USD 29 million) or a market value of no less than RMB 2 billion (approx. USD 290
million).
o The applicant’s annual sales revenue should be more than RMB 100 million (approx. USD 14.5 million)
or its average compound growth rate of sales revenue in the last three years should exceed 20%.
o The applicant must have comprehensive headquarter functions in Shanghai, including R&D, sales, and
settlement, and have two or more branches in areas outside Shanghai.
o The annual R&D expenses of an industrial enterprise should account for more than 5 percent of its
sales revenue, while for companies in the services sector (such as IC design), the figure needs to be
over 10%. Alternatively, total annual R&D expenses of more than RMB 50 million (approx. USD 7.3
million) can also meet the requirements for R&D outlay.
o The applicant should have R&D personnel at a ratio over 10% for industrial companies and 20% for
services companies (such as IC design companies) or have more than 100 R&D employees.
o The applicant should have core intellectual property rights of major products or services in Shanghai,
including more than 15 invention patents, exclusive rights of IC layout design and software copyrights.
• Rewards and Support for Recognized Innovative Enterprise HQs: For qualified innovative enterprise
HQs:
o They will be offered up to RMB 5 million (approx. USD 0.73 million) as start-up funds if they
are registered in Shanghai or have moved registration to Shanghai since January 1, 2022, and
have paid-in registered capital of over RMB 100 million (approx. USD 14.5 million).
1 https://fgw.sh.gov.cn/fgw_gfxwj/20230222/682548014c164b79a84e5be7843b1abb.html
2
o They will be rewarded for good performance: Innovative HQs whose annual revenue has
reached RMB 500 million (approx. USD 73 million), RMB 1 billion (approx. USD 145.6 million)
and RMB 1.5 billion (approx. USD 218.4 million), respectively, for the first time since Jan 1,
2022 – of which the local contributions newly brought in by such HQs are not less than RMB
10 million (approx. USD 1.5 million) – will be given RMB 5 million (approx. USD 0.73 million),
RMB 3 million (approx. USD 0.44 million), and RMB 2 million (approx. USD 0.29 million) as
performance rewards.
o Supports will be offered to innovative Enterprise HQs in relation to the industrialization of
major projects, cultivation of high-value patents, recruitment drives, imports of research and
development materials, innovative product procurements, commercialization of
achievements, registration and other aspects.
Beijing Released a Development Fund Implementation Guideline for High-grade, Precision and
Advanced Industry
On February 24, 2023, Beijing Municipal Bureau of Economy and Information Technology and Beijing
Municipal Finance Bureau jointly released the High-grade, Precision and Advanced Industry
Development Fund Implementation Guideline of 2023 (First Batch).2
The parts applicable to IC sectors
are as follows:
• Beijing will support IC design enterprises to launch first-round tape-out of multi project wafer (MPW)
and engineering products (full mask) and reward qualified enterprises based on tape-out costs, with
a maximum amount for a single enterprise of RMB 30 million (approx. USD 4.4 million).
• Beijing will support innovative IC enterprises that carry out R&D in Zhongguancun (a major technology
hub in Beijing) to purchase qualified EDA design software (including software upgrade expenses) and
offer rewards based on actual procurement expenses, with a maximum amount for a single enterprise
of RMB 5 million (approx. USD 0.73 million).
• Beijing will provide insured companies in the field of automotive chip with subsidies of no more than
50% of the relevant insurance premiums, while the amount of subsidy for a single automotive chip
insurance policy shall not exceed RMB 5 million (approx. USD 0.73 million), with a maximum annual
amount of RMB 10 million (approx. USD 1.5 million) for a single enterprise.
Jiangsu Released Plans for Promoting the Development of New Industries of Strategic Importance
On February 16, 2023, Jiangsu government issued Implementing Plans for Promoting the Development
of Cluster of Emerging Industries of Strategic Importance3
. According to the plans, Jiangsu aims to build
and foster one integrated circuit (IC) industry cluster and one third-generation semiconductor industry
cluster, with the goals to bring in large-scale production lines, improve supply of IC design tools, build a
national third-generation semiconductor technology innovation center and a lead third-generation
semiconductor industry base, produce single crystal substrates and epitaxial materials based on silicon
carbide (SiC), gallium nitride (GaN), etc., and promote research and industrialization of key components
such as wide bandgap semiconductor electronic devices, radio frequency devices, and high-power
semiconductor lasers.
2 http://jxj.beijing.gov.cn/jxdt/tzgg/202302/t20230224_2923839.html
3 http://www.js.gov.cn/art/2023/2/24/art_84418_10766860.html
3
Hangzhou Released Policies for Stimulating its High-quality Economic Development
On February 14, 2023, the government of Hangzhou, the capital of East China’s Zhejiang province, rolled
out Several Policies for Promoting its High-quality Economic Development4
, which contains 64 specific
measures.
According to the policies, Hangzhou will provide a development fund of RMB 380 million (approx. USD
55 million) in total for the intelligent IOT (Internet of Things) industry (including IC sectors). In addition,
Hangzhou will actively implement national tax policies for the IC sectors and streamline tax filing
procedures and will encourage and support IC enterprises to undertake national and provincial
technological research projects.
Chengdu High-Tech Zone Released Two Policy Drafts to Support Development of the Power
Semiconductor Industry
On February 9, 2023, Chengdu High-Tech Industrial Development Zone (the “Chengdu High-tech Zone”)
held a press conference with respect to the power semiconductor industry in Chengdu High-tech Zone.
Chengdu a major city in southwest China, and Chengdu High-tech Zone is a national-level high-tech
zone. In the meeting, Chengdu High-tech Zone released two policy drafts open for comment: the ThreeYear Action Plan of the Chengdu High-tech Zone for Power Semiconductor Industry (2023-2025) and the
Several Policies of the Chengdu High-Tech Zone to Promote Development of Power Semiconductor
Industry5
.
Although the full texts of these drafts are not available online, official news sources reveal that the two
policy drafts focus on the following:
⚫ The Chengdu High-tech Zone’s goal is to build a cluster of the power semiconductor industry with a
strong innovation capacity and a complete industrial chain and to expand the industrial scale by 2024
and achieve comprehensive breakthroughs by 2025.
⚫ 11 specific policies are expected to be introduced, including but not limited to:
o Provide support up to RMB 500 million (approx. USD 73 million) for enterprises engaging in major
manufacturing projects (such as power semiconductor manufacturing, packaging and testing,
raw materials, parts, components and equipment).
o Encourage enterprises to participate in investment funds for power semiconductor production
lines and hire global talent.
o Encourage colleges to provide open access to equipment and instrument resources, etc.
EUROPE
European Chips Act about to enter critical negotiation stage
The European Chips Act, a critical initiative for boosting the region’s competitiveness and resilience in
semiconductor technologies and applications is one step closer to adoption, as the legislative process
heads towards the final “trilogue stage”. Under the mediation of the European Commission,
4 http://www.hangzhou.gov.cn/art/2023/2/14/art_1229063381_1829807.html
5 http://www.cdht.gov.cn/cdht/c139673/2023-02/10/content_3f222c74a60943cf8a1f687a7374aab8.shtml
4
representatives from the European Parliament and the Council of the European Union are set to negotiate
a provisional agreement, with the objective to reach a compromise on critical Articles within the Act. The
Members of the European Parliament (MEPs) and Member States’ Ministers represented in the Council
can subsequently adopt the compromise text according to the rules of each institution. The first round of
trilogue negotiations is expected to take place on 28 February 2023.
“The EU Chips Act should establish Europe as a key player in the global semiconductors arena. Not only
does the budget need to be commensurate with the challenges and funded through fresh money, but the
EU should lead in research and innovation, have a business-friendly environment, a fast-permitting process
and invest in a skilled work force for the semiconductor sector. Our goal is to ensure growth in Europe,
prepare for future challenges and have in place the right mechanisms for future crises”
6 – said Dan Nica
(MEP), European Chips Act rapporteur for the Industry, Research and Energy (ITRE) committee of the
European Parliament.
The Council of the European Union will be represented in the trilogue negotiations by Sweden, as the
holder of the Council presidency in the first half of 2023 representing the Council’s general approach
position adopted on 1 December 2022 under the Czech Presidency7
.
EU countries and European Investment Bank launch European Tech Champions Initiative
On February 13, five EU Member States (Spain, Germany, France, Italy and Belgium) and the European
Investment Bank launched the European Tech Champions Initiative (ETCI), a €3.75 billion fund to help
Europe’s most promising scale-ups finance their late-stage growth phase8
. The European Investment Bank
estimates that around 75% of European high-tech companies get acquired by foreign investors in this
stage. This new investment allows these companies to remain in Europe, thereby also contributing to the
EU’s strategic autonomy and competitiveness objectives.
The ETCI will be a “Fund of Funds”, meaning that the capital bolsters existing European scale-up Venture
Capital funds without crowding out private investments, thereby creating more overall financing
availability. The initiative creates an attractive asset class for European institutional investors looking to
diversify their portfolios, which helps to maintain a continuous and self-sustaining flow of funding to
European scale-ups. In doing so, ETCI seeks to mobilize more than €10 billion in total investments in
innovative companies in their growth stage. This is crucial for companies seeking more than €50 million
in investments, which are currently faced with a scale-up gap9
.
Managed by the European Investment Fund, ETCI has secured commitments from Spain, Germany and
France with €1 billion each, while Italy and Belgium agreed to provide €150 million and €100 million
respectively, complementing €500 million deployed by the EIB Group. The size of the fund is expected to
grow with future commitments.
“Innovative businesses need to be able to find the equity capital they need right here in Europe” said Marjut
Falkstedt, Chief Executive of the European Investment Funds. “As manager of the ETCI, we will be using
6 https://www.europarl.europa.eu/news/en/press-room/20230210IPR74801/semiconductors-meps-ready-to-start-talks-onnew-law-to-boost-eu-chips-industry
7 https://www.consilium.europa.eu/en/press/press-releases/2022/12/01/chips-act-council-adopts-position/
8 https://www.eif.org/what_we_do/etci/index.htm
9 https://www.reuters.com/business/five-eu-countries-eib-launch-fund-help-promising-tech-companies-grow-2023-02-13/
5
our scale and expertise to nurture a sustainable late-stage growth ecosystem capable of supporting
homegrown innovation.” 10
According to EURACTIV, the first ETCI projects are set to be announced in the coming period11
.
European Heads of State and Government discuss future direction of EU’s competitiveness and green
industries
During a meeting of the European Council on 9 and 10 February, EU Heads of State and Government
discussed the bloc’s long-term competitiveness and its role on the global stage12
.
A key agenda point of the summit was the Green Deal Industrial Plan, first presented by Commission
President von der Leyen earlier this month. The Plan aims to boost the EU’s net-zero industries in support
of the Union’s goal to achieve climate neutrality by 2050. In this context, the key decision-makers from
Member States highlighted five areas where further action needs to be taken: enhancing state-aid policy,
optimizing the use of available EU-level funding, simplifying the regulatory environment for investment,
making the skills agenda more ambitious, and critically: closing the overall investment gap.
The joint statement concluded that the bloc is to strengthen its “strategic sovereignty and make its
economic, industrial and technological base fit for the green and digital transitions”. In particular, access
to critical raw materials should be ensured by exploring possibilities on how to diversify sources of supply
and recycling. It further stresses that the multilateral rules-based system is key to strengthening the EU’s
sovereignty and prosperity.
At the next meeting of EU Heads of State and Government, on the 23rd and 24th of March, 2023, the
Commission strategy to boost competitiveness and productivity at EU level will be discussed further13
.
European Parliament adopts resolution in support of EU’s clean tech leadership ambitions
In a motion adopted on 16 February 2023, Members of the European Parliament (MEPs) welcomed the
Green Deal Industrial Plan for the net-zero age, a critical initiative announced earlier in the month by
Commission President Ursula von der Leyen.
Reflecting on the framework’s outlined measures, MEPs welcomed the EU’s push for further greening of
Europe’s industrial ecosystem, pointing out the need for a truly European plan that can protect the
integrity of the EU Single Market, while achieving the objectives of open strategic autonomy and of the
twin green and digital transitions14
.
Specifically, MEPs called on the Commission to ease access to funding and simplify permitting procedures
for clean and renewable energy sources, as well as for projects of strategic interest for Europe. Critically,
the EU should take measures to accelerate production capacities for affordable, secure and clean energy
10 https://www.eif.org/what_we_do/news/2023/launch-of-new-fund-of-funds-to-support-european-tech-champions.htm
11 https://www.euractiv.com/section/industrial-strategy/news/eu-launches-tech-champions-initiative-to-keep-europeanownership-of-scale-ups/
12 https://data.consilium.europa.eu/doc/document/ST-1-2023-INIT/en/pdf
13 https://data.consilium.europa.eu/doc/document/CM-2-2023-INIT/en/pdf
14 https://www.europarl.europa.eu/news/en/press-room/20230210IPR74806/green-deal-industrial-plan-securing-the-eu-sclean-tech-leadership
intended for use by industry and to increase energy savings and energy efficiency measures. Investment
into skills to produce high quality jobs and economic growth should be prioritized as well.
To avoid fragmentation by uncoordinated state aid, MEPs supported the creation of a new European
Sovereignty Fund, enabling investments in key strategic sectors including, among others, critical raw
materials. Crucially, the delegates urged the European Commission to propose a new generation of
partnerships to make full use of EU’s economic and political leverage to promote values and standards.
This should help diversify supply chains to Europe, particularly of critical technologies and raw materials15
.
Overall, MEPs expressed the need for the EU to become a leader in clean energy technologies by
improving its existing industrial base to produce economic growth and to achieve its Green Deal
ambitions.
JAPAN
Prime Minister Kishida Announces Three Fundamentals of Future Science, Technology, and Innovation
Policy
On February 8, 2023, Prime Minister Kishida convened the 66th Council for Science, Technology and
Innovation, and announced that future science, technology and innovation policies would be based on
the following three pillars16. The “Integrated Innovation Strategy 2023” is expected to be formulated by
June of this year, focusing on these three points.
(i) Strategic promotion of advanced science and technology:
Strengthening national strategies for quantum, AI, etc., promoting advanced science and
technology to strengthen economic security, promoting multi-use advanced science and
technology based on national security strategies, etc.
(ii) Strengthen the foundation of knowledge (research capabilities) and human resource
development:
Internationally outstanding research universities/10 trillion yen university fund, enhancement
of research capabilities by regional core universities, support for young researchers including
doctoral students/securing time for research, promotion of research DX, closing the gender
gap in science, promotion of high-level human resource development/activities, etc.
(iii) Development of an innovation ecosystem:
Thorough support for startups (promotion of 5-year startup development plan), strengthening
support for deep tech, etc., global startup campus concept, etc.
Establishment of Expert Committee on Security Clearance System
On February 14, 2023, in accordance with the policy decided at the Economic Security Promotion
Council attended by Prime Minister Kishida, the “Expert Council on Security Clearance System in
Economic Security Sector” was established on February 22, 202317
.
15 https://www.europarl.europa.eu/doceo/document/TA-9-2023-0053_EN.html
16 https://www.kantei.go.jp/jp/101_kishida/actions/202302/08kagaku.html
https://www8.cao.go.jp/cstp/siryo/haihui066/haihu-066.html
https://www8.cao.go.jp/cstp/siryo/haihui066/siryo1.pdf
17 https://www.cas.go.jp/jp/seisaku/keizai_anzen_hosyo_sc/index.html
7
So-called “security clearances” are part of national information security measures; the system, on the
premise that (1) information of national security importance held by the government is designated, is
based (2) those who need access to such information (government employees and, if necessary, private
parties) are investigated by the government, and access rights are granted after confirming the
trustworthiness of such persons; it is usually the case that (3) special information management rules are
established, and severe penalties are imposed on those who divulge such information.
The following points were noted at the experts’ meeting as items for further discussion.
· What is the important information/things that should be protected with a security clearance
system from an economic security perspective?
· In what cases are Japanese companies required to hold security clearances in foreign
countries? Also, what kind of information is required to have a security clearance when trying
to access it?
· What kind of system is suitable for Japanese companies to promote their international
business?
It is expected that the security clearance system will be discussed in about one year.
SOUTH KOREA
S. Korea to invest 223 bln won over 10 yrs in nurturing semiconductor talent
Seeking to address workforce shortages, the South Korean government along with the country’s major
chipmakers agreed to cultivate more than 2,300 top-level talents in the semiconductor field over the
next decade to reinforce its strong standing in global technology18
.
The Ministry of Trade, Industry and Energy signed a memorandum of understanding with Samsung
Electronics Co., SK Hynix Inc. and the Korea Semiconductor Industry Association, to pull together a total
of 222.9 billion won (US$171.72 million) through 2032 for various research and development projects.
The projects will be led by chipmakers in cooperation with universities to develop at least 2,365 experts
who will hold a master’s degree or higher in the semiconductor field over the next 10 years.
Finance minister urges passage of bill on tax incentives for chipmakers
South Korea’s chief economic policymaker, Finance Minister Choo Kyung-ho, called Tuesday for
parliament to promptly pass a bill on providing more tax incentives to chipmakers amid the prolonged
downturn in exports making the point that passage of the bill will be required to strengthen the
competitiveness of the chip industry19
.
“Unfortunately, the bills that need to be urgently passed for the economy, including a revised tax law
that aims to bolster the competitiveness of the country’s strategic industries, such as chips, have not
been passed at parliament,” Choo said in a statement.
18 SOURCE: S. Korea to invest 223 bln won over 10 yrs in nurturing semiconductor talents | Yonhap News Agency (yna.co.kr)
19 SOURCE: (LEAD) Finance minister urges passage of bill on tax incentives for chipmakers | Yonhap News Agency (yna.co.kr)
8
Under the proposal, chip industry conglomerates will receive a higher tax credit rate of 15 percent on
facility investment, which is up from the revised 8 percent passed in December. The rate for small and
midsized businesses will also increase from 16 to 25 percent.
TAIWAN
National Development Council Announced 12 Key Strategies for 2025 Net-Zero Emission Pathway
On February 28, the National Development Council (NDC), along with eight other government ministries
(Environmental Protection Administration, Ministry of Economic Affairs, Ministry of Transportation and
Communications, Financial Supervisory Commission, Ministry of Labor, Ministry of Interior, Council of
Agriculture and National Science and Technology Council), held a press conference, unveiling objectives
for 2030 and elaborating on the specific measures of 12 Key Strategies under Taiwan’s Pathway to NetZero Emissions in 2050.
In connection with ‘Taiwan’s Pathway to Net-Zero Emissions in 2050’ announced last March, the 12 key
strategies are as follows:
- Wind/Solar PV
- Hydrogen
- Innovative Energy
- Power Systems and Energy Storage
- Energy Saving and Efficiency
- Carbon Capture, Utilization & Storage (CCUS)
- Carbon Free and Electric Vehicles
- Resource Recycling and Zero Waste
- Carbon Sinks
- Green Lifestyle
- Green Finance
- Just Transition
And by the year of 2030, Taiwan aims to: - Drive private investment over NT$4 trillion.
- Create production value NT$5.9 trillion.
- Create 551,000 jobs.
- Lower energy dependency to below 50% in 2050.
- Reduce air pollution by about 30%.
Sources:
https://www.ndc.gov.tw/nc_27_36501
https://www.ndc.gov.tw/en/Content_List.aspx?n=2D918002A913582A
UNITED STATES
9
CHIPS Implementation
The Department of Commerce (DOC), through the CHIPS Program Office (CPO), kicked off its
implementation of the CHIPS Incentive Program by releasing its first Notice of Funding Opportunity
(NOFO). The NOFO is specifically intended to support the “construction, expansion, or modernization of
commercial facilities for the front- and back-end fabrication of leading-edge, current-generation, and
mature-node semiconductors.” Subsequent NOFOs focused on semiconductor materials suppliers and
equipment manufacturers and research and development facilities are expected in the late spring and
fall, respectively.
The CHIPS Incentive Program has up to $38.22 billion available in direct funding to support awards made
through this NOFO, with these funds accounting for 5-15 percent of total capital expenditures for any
given project. CPO does not anticipate that the entirety of those funds will be dispersed through this
opportunity alone and expects that funding will be available through future opportunities. Additionally,
the Program has up to $75 billion in direct loan or guaranteed principal. Taken together, total CHIPS
incentives are expected to account for no more than 35 percent of total project capital expenditures.
We encourages potential applicants to review the NOFO in its entirety and to visit the CHIPS.gov website
for additional information, including FAQs, factsheets, and webinars. CPO also intends to release
comprehensive guidance on workforce development as well as a Notice of Proposed Rulemaking
focused on implementing the national security guardrails outlined in the NOFO.
Congressional Hearings
Despite a politically divided Congress, committee hearings across both the Democrat-led Senate and the
Republican-led House often focused on one common topic: competition with China. This theme is
expected to ramp up as the congressional calendar nears the 2024 presidential election.
The primary topic for congressional hearing over the next two weeks is going to be examining the
President’s Budget Request that is to be released, today, March 9, 2023. Already noticed hearings
include (more will be noticed):
• Senate Armed Services Committee, Subcommittee on Strategic Forces — Hearings to examine
United States Space Force programs in review of the Defense Authorization Request for Fiscal
Year 2024 and the Future Years Defense Program.
o Date: March 14, 2023 Link: https://www.armed-services.senate.gov/
• Senate Environment and Public Works Committee — Hearings to examine implementing the
Infrastructure Investment and Jobs Act, focusing on perspectives on the Drinking Water and
Wastewater Infrastructure Act.
o Date: March 15, 2023 Link: https://www.epw.senate.gov/public/index.cfm/hearings
• Senate Budget Committee — Hearings to examine the President’s proposed budget request for
fiscal year 2024.
o Date: March 15, 2023 Link: https://www.budget.senate.gov/
• Senate Finance Committee — Hearings to examine the President’s proposed budget request for
fiscal year 2024.
o Date: March 16, 2023 Link: https://www.finance.senate.gov/
Executive Order on Outbound Investment Screening
10
The Biden Administration is reportedly preparing an executive order that would create a mechanism for
screening and restricting U.S. investment in certain parts of the Chinese economy. The ultimate aim
would be to prevent U.S. dollars from subsidizing China’s development of advanced technologies that
could advance its military and intelligence capabilities. Additional details are expected to be released as
part of the President’s fiscal year (FY) 2024 budget request, which will be issued on March 9.
These developments come in the wake of the Administration’s recent decision to level export
restrictions on dozens of Chinese entities targeting advanced technologies and biotechnologies. The
Department of Commerce justified the actions by citing national security and foreign policy concerns.
Some of the entities were also targeted because of the alleged role they are playing in helping Russia’s
military circumvent the international sanctions regime put in place following the Russian invasion of
Ukraine. Items that are classified as “Dual use” are of particular concern for the Administration and
expected to see an increase in attention.