Shanghai woos semiconductor and AI projects with generous subsidies, lining up behind Beijing’s innovation drive

Shanghai’s municipal government has vowed to provide up to 100 million yuan (US$14.45 million) to shore up investments in semiconductors, biomedicine, and artificial intelligence (AI), amid the country’s growing technological rivalry with the US.

Mega projects related to semiconductor equipment and materials including components, raw materials and high-end software such as electronic design automation (EDA), will be subsidised by up to 30 per cent of the total project investment, or a maximum of 100 million yuan, according to a policy announcement issued by the municipal government on its website on Tuesday.

The city authority also plans to boost key AI projects, such as intelligent chips, core algorithms, operating systems and basic software, with subsidies of less than 30 per cent of total project investment, or up to a maximum of 20 million yuan, according to the policy document.

The policy, which consists of 24 measures focusing on “accelerating the construction of a modern industrial system”, aims to “enhance the vitality of industrial development” and “improve the city’s core competitiveness”. The policy will be implemented between 2023 and 2028.

The support follows a decision by the central government to shift its emphasis to “high-quality development” after prioritising fast economic growth for years. China also wants to become more self-reliant in technological innovation as it seeks to counter Washington’s use of sanctions to contain the country’s tech progress.