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Chinese chipmakers get tax relief amid trade tensions

China's ministry of finance issued new tax breaks and exemptions for semiconductor manufacturers in an attempt to curb dependence on foreign chips, effective Jan. 1, Reuters reported.

Under the new rules, manufacturers producing high-end chips using 65 nanometre technology or smaller with an investment exceeding 15 billion Chinese yuan will be exempt from corporate taxes for five years. Manufacturers producing chips using 130 nanometre technology or smaller will see exemptions for two years. Afterward, the companies will be subject to partial exemptions as China aims to become a top semiconductor producer by 2030, Reuters noted.

The move comes as trade tensions intensify with the U.S. seeking to impose tariffs on up to $50 billion of Chinese exports. The U.S. is pressing China to import more semiconductors from the U.S., among other things, to avoid the proposed tariffs.

Semiconductors make up for one of the highest contributions in Chinese imports in value terms.

As of March 29, US$1 was equivalent to 6.29 Chinese yuan.