19:17 GMT26 September 2020
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    The Chinese government is set to boost support for manufacturers of third-generation chips over the next five years, with the measures backing research, finance and education in the nation's chipmaking industry, sources familiar with the matter said in reports on Thursday.

    The semiconductor industry in China is set to receive backing from several government policies aimed at countering measures from the Trump administration, anonymous sources told Bloomberg.

    The plans have been included in a draft of Beijing's 14th Five-Year Plan set to be presented in October, the sources added.

    Numerous Chinese chip firms saw stocks rise on Thursday, where Shanghai Fudan Microelectronics Group Co gained 4.3 percent on the Hong Kong Exchange (HKEX) and mainland chipmaker Will Semiconductor Ltd climbed nearly 10 percent.

    Firms such as Xiamen Changelight Co and Focus Lightings Tech co were boosted 14 percent and 5.6 percent, respectively.

    “The Chinese leadership realizes that semiconductors underpin all advanced technologies, and that it can no longer dependably rely on American supplies. In the face of stricter U.S. restrictions on chip access, China’s response can only be to keep pushing its own industry to develop,” Dan Wang, technology analyst for Gavekal Dragonomics said in a statement.

    The news comes after the Chinese State Council pledged $1.4tn to boost mainland technologies amid the ongoing US trade war against China, including 5G and 6G, artificial intelligence, smart city, green energy and infrastructure, among others.

    The funds were backed by Chinese president Xi Jinping and will be invested up to 2025. Companies such as Huawei Technologies, Alibaba Group and Tencent Holdings will join efforts in the massive initiative.

    Beijing also sought help from over 100 engineers and staff from Hsinchu-based Taiwan Semiconductor Manufacturing Co in a major push to reduce dependence on US tech firms via amid Washington's trade war.

    Huawei's chipmaking wing HiSilicon is also set to design and manufacture 45-nanometre chipsets for some devices and later, smaller 28-nanometre models, to replace the company's flagship Kirin processors set to cease production in September.

    US president Donald Trump passed measures in May to block Huawei's access to US processors and extend a ban on mainland firms doing business with American companies, with Washington accusing the latter of being a national security threat, without citing evidence.

    The ongoing trade war has spread to numerous Chinese tech firms, including Tencent, TikTok owner ByteDance and Alibaba Group, sparking further diplomatic rows and lawsuits from the world's largest tech unicorn.

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    trade war, trade row, China, Shanghai, Huawei, Donald Trump, US-China trade war, processors, affected processors, semiconductors
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