The Chinese government will reportedly launch a new round of subsidization to encourage investment in semiconductor manufacturing, but projects involving compound semiconductors, mainly SiC and GaN, are expected to be excluded, according to industry sources.
According to Reuters and Bloomberg, China, to cope with US sanctions, plans to appropriate over CNY1,000 billion (US$143.6 billion) to subsidize investment in semiconductors to strengthen the local supply chain.
However, compound semiconductors are very likely to be excluded from the new round of subsidization, because they are already covered in the 14th 5-year National Development Plan, and China began to strictly screen compound semiconductor projects in mid-2022, industry sources said.
Before mid-2022, compound semiconductor projects could usually receive the greenlight without much official scrutiny, the sources noted. Consequently, the number of such projects had surged and many of them had overestimated their financial feasibility, the sources indicated. For example, there were investors who sold B-grade SiC crystal as moissanite to jewelry stores, but such non-operating sales were irrelevant to the government's attempt to boost investment in SiC.
Chinese government authorities have started strictly examined such investment projects since mid-2022, the sources said. For example, SiC epitaxial wafer maker TankeBlue Semiconductor has had to withdraw its IPO on the Shanghai Stock Exchange after being deemed unqualified.
According to Canaccord Genuity, global production capacity for SiC will increase from an equivalent of 125,000 6-inch epitaxial wafers in 2021 to four million in 2030.
