National Integrated Circuit Industry Development Outline -- Guofa [2014] No. 4

Executive Summary

The National Integrated Circuit Industry Development Outline was issued on June 24, 2014 (Guofa [2014] No. 4), serving as China's dedicated development plan for the integrated circuit (IC) industry. The document explicitly identifies the IC industry as the core of the information technology sector and a "strategic, foundational, and pioneering industry" that supports economic and social development while safeguarding national security. It designates the current period as a "critical strategic opportunity and breakthrough period" for China's IC industry.

The Outline was issued against the backdrop of China possessing the world's largest IC market while maintaining a significant gap with advanced countries in industrial development. Products were heavily dependent on imports, failing to adequately support the construction of national industrial competitiveness or information security. Simultaneously, the global IC industry was entering a period of major restructuring: investment scales were rapidly escalating, market share was concentrating in leading enterprises, and mobile smart terminals, cloud computing, and IoT applications were experiencing explosive growth.

The document establishes five guiding principles -- demand-driven development, innovation-driven growth, hardware-software integration, focused breakthroughs, and open development -- and sets phased development targets: by 2015, achieve institutional innovation and 32/28nm volume production; by 2020, achieve 16/14nm volume production and an initial industry ecosystem; by 2030, reach international advanced levels across the main links of the industrial chain. The Outline laid the policy foundation for China's semiconductor industry leap, with its landmark measures including the establishment of the National Integrated Circuit Industry Investment Fund ("Big Fund") and a comprehensive suite of tax incentive policies.

Key Provisions

Priority development of IC design: Using rapid design industry growth to drive manufacturing development. Near-term focus on mobile smart terminals and network communications, developing widely needed mobile terminal chips, digital TV chips, network communication chips, and wearable device chips. Accelerating core technology R&D in cloud computing, IoT, and big data, progressively breaking through key ICs for smart cards, smart grids, automotive electronics, and medical electronics.
Accelerated manufacturing development: Expanding 45/40nm chip capacity, accelerating 32/28nm production line construction, and advancing 22/20nm and 16/14nm production line development. Vigorous development of analog and mixed-signal circuits, MEMS, high-voltage circuits, RF circuits, and other specialty process production lines.
Advanced packaging and testing upgrade: Promoting domestic packaging and testing enterprise consolidation through M&A to increase industry concentration. Developing and industrializing advanced technologies including chip-scale packaging (CSP), wafer-level packaging (WLP), through-silicon via (TSV), and 3D packaging.
Key equipment and materials breakthrough: R&D of critical equipment including lithography machines, etching machines, and ion implanters. Development of key materials including photoresists and large-diameter silicon wafers. Strengthening collaboration between manufacturing enterprises and equipment/materials suppliers.
National Industry Investment Fund: Attracting major enterprises, financial institutions, and social capital. Primary focus on manufacturing, with balanced support for design, packaging and testing, equipment, and materials. Supporting establishment of local investment funds and encouraging venture capital and private equity entry.
Secure and reliable software/hardware promotion: Government procurement projects to adopt products based on secure and reliable software and hardware. Encouraging telecommunications and internet enterprises to procure systems based on secure and reliable components.

Goals and Timelines

Milestone	Manufacturing Target	Industry Development Target
2015	32/28nm volume production	Industry sales revenue exceeding 350 bln RMB; mid/high-end packaging and testing revenue share above 30%; 65-45nm key equipment and 12-inch wafers applied in production lines
2020	16/14nm volume production	Industry annual revenue growth exceeding 20%; design technology in key areas reaching international leading level; packaging and testing at international advanced level; key equipment and materials entering international procurement systems
2030	International advanced level across the chain	A group of enterprises entering the global first tier, achieving leapfrog development

Implementation Mechanisms

Organizational leadership: Establishment of a National IC Industry Development Leading Group responsible for overall coordination and top-level design. A consultative committee provides advisory input on major issues and policy measures.

National Industry Investment Fund ("Big Fund"): This is the Outline's most iconic measure. The fund operates on market-based principles, primarily supporting manufacturing while covering design, packaging and testing, equipment, and materials. Phase I (2014) raised approximately 138.7 billion RMB, and Phase II (2019) raised approximately 204.1 billion RMB, substantially leveraging social capital into the semiconductor industry.

Financial support: Leveraging complementary advantages of policy-based and commercial finance, encouraging banks to increase credit support and create industry-specific lending products. Supporting enterprises in domestic and overseas IPOs, bond issuance, and other debt financing instruments.

Tax incentives: Strengthening implementation of tax preferences from Guofa [2000] No. 18 and Guofa [2011] No. 4, including corporate income tax benefits for packaging, testing, materials, and equipment enterprises. Implementing import duty exemptions for key equipment needed for major science and technology projects.

Talent development: Establishing a comprehensive IC talent cultivation system, supporting microelectronics discipline development, building model microelectronics colleges. Training high-level and urgently needed specialists through various programs, with improved equity and stock option incentive mechanisms.

Opening up: Actively attracting overseas capital, technology, and talent, encouraging international IC companies to establish R&D and production centers in China. Leveraging cross-strait cooperation mechanisms to strengthen IC industry collaboration between the mainland and Taiwan.

Industry Impact

The National IC Industry Development Outline has had a profound and lasting impact on China's semiconductor industry and is widely regarded as the foundational document of China's modern semiconductor policy.

Capital dimension: The Big Fund's Phase I and Phase II, with combined direct investments exceeding 340 billion RMB, along with matching local funds and social capital, leveraged total semiconductor industry investments exceeding one trillion RMB. This fundamentally transformed the chronic financing challenges faced by Chinese semiconductor enterprises and drove numerous wafer fab construction projects.

Industrial structure: The Outline promoted coordinated development across the value chain. The design sector produced internationally competitive firms such as HiSilicon and UNISOC; in manufacturing, SMIC and Hua Hong Semiconductor progressively narrowed the technology gap with TSMC; in packaging and testing, JCET and TongFu Microelectronics entered the global top ten through acquisitions.

Technology dimension: Under the Outline's guidance, China made notable progress in 14nm FinFET manufacturing, advanced packaging technologies, and certain key equipment (etching machines, thin-film deposition equipment), though critical challenges remain in areas such as lithography equipment.

International impact: The Outline, together with the subsequent "Made in China 2025," became focal points in international discussions of Chinese industrial policy and served as part of the policy context for semiconductor export controls later implemented by the United States and allied nations.

Amendment History

The Outline has not undergone formal revision since its June 2014 publication. However, its policy objectives and measures have been continuously updated and strengthened through subsequent documents, notably the IC-related provisions of "Made in China 2025" (2015), the continued advancement of National Science and Technology Major Projects (Projects 01 and 02), and the establishment of the Big Fund Phase II (2019). The State Council's 2020 "Several Policies for Promoting High-Quality Development of the IC Industry and Software Industry in the New Era" (Guofa [2020] No. 8) further upgraded tax and financing policies.