CNBC:

My question is, what specific goals or production plans does China have for the chip industry during the 14th Five-Year Plan period and amid global changes? Thank you.

Xiao Yaqing:

Thanks for your question. Let's invite Mr. Tian to answer it.

Tian Yulong:

Thanks for your question. Chips and integrated circuits are the cornerstone of the information society and an important foundation of information technology. The high-quality development of the chip industry is related to the development of the modern information industry and industrial chains. China saw a very impressive and constantly growing integrated circuit industry during the 13th Five-Year Plan period. According to the estimates of China's semiconductor industry, China's revenue of integrated circuit sales reached 884.8 billion yuan in 2020, an average growth rate of 20% and three times the growth rate of the global integrated circuit industry during the same period. We have also made breakthroughs in technological innovation, with significant improvement in manufacturing techniques, packaging technologies, and key equipment materials. Companies also grew steadily, a number of whom emerged as global leaders in design, manufacturing, packaging and testing, and other links on the industrial chain.

On the whole, the Chinese government highly values the chip and integrated circuit industries, and has issued policies for the high-quality development of the integrated circuit and software industries, while comprehensively optimizing policies for the high-quality development of the chip and integrated circuit industries. There are several main measures.

First, we have introduced further tax cuts for companies. The policies of reducing or exempting corporate income tax for profit-making integrated circuit enterprises have boosted their development. Second, we have further strengthened the foundation. The development of chips involves many basic aspects, including materials, techniques, and equipment, and relies on a considerably large industrial chain. Only by laying a solid foundation, can there be constant innovation and growth for the industry. In addition, the integrated circuit industry needs a very good ecological environment to build a platform that can form a complementary and mutually supportive process in the industry chain. Therefore, it is critical to have a platform and a good ecosystem. The development of the chip industry is completely guided by the application of its products. Therefore, the rapid development of the automobile sector, industry, medical care, and education, especially the online economy and digital economy since the COVID-19 outbreak, has provided a very broad market for the chip industry. The development of the industry also relies on talent, so the government and the country have adopted a series of measures to boost our talent reserves and training. Finally, the chip industry is globalized, and we should increase collaboration.

In general, the chip industry faces both opportunities and challenges. It is necessary to strengthen collaboration on a global scale to jointly build a global industrial chain and make it healthier and more sustainable. It will not only support the development of China's information society, but also support global applications of information technology. The Chinese government will create a market-oriented, law-based and international business environment and ecosystem for the industry with efforts at the national level. That's all I have to say for it. Thank you.