Analysis of the Impact of Guangzhou's Integrated Circuit Industry Support Policies on A-Share Semiconductor Sector Investments

Based on a comprehensive analysis of Guangzhou’s integrated circuit industry policies, the performance of the A-Share semiconductor sector, and the domestic substitution process, I will provide you with a systematic and comprehensive research report.

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The draft for comments of the “Several Policies of Guangzhou on Promoting High-Quality Development of the Integrated Circuit Industry Across the Entire Chain During the 15th Five-Year Plan Period” issued by the Guangzhou Bureau of Industry and Information Technology has constructed a policy support system covering all links of the industrial chain[1]:

Subsidy Type	Subsidy Ratio	Upper Limit per Project	Eligibility Criteria
Equipment Procurement for Technological Transformation	No more than 20%	RMB 30 million	Integrated circuit manufacturing enterprises
Workshop Construction and Installation Project Investment	No more than 2%	RMB 5 million	Qualified investment projects

• Industrial chain collaborative cooperation projects: Maximum reward of RMB 10 million
• Newly introduced packaging and testing module enterprises: Maximum support of RMB 15 million
• Public service platform construction (including silicon photonics/EPDA platforms): Maximum reward of RMB 30 million

On June 16, 2025, Guangzhou Development Zone and Huangpu District issued special policy measures[2], providing targeted support in multiple dimensions:

Support Field	Specific Measures	Subsidy Upper Limit
Tape-Out Subsidy	Costs of MPW tape-out or full-mask first tape-out	40% of the cost, up to RMB 5 million per enterprise per year
High-End Sensors	First tape-out costs	Equal support as above
EDA Tool Procurement	Subsidy for actual procurement amount	30% of the amount, up to RMB 1 million per enterprise per year
Talent Introduction	Reward for high-end talents/teams	Up to RMB 5 million
Industrial Activities	Subsidy for industry events	Up to RMB 6 million

: By the end of 2027, add 82 IC design enterprises (with total revenue of RMB 10 billion) and 22 packaging and testing module enterprises (with total output value of RMB 20 billion).

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Nationwide, integrated circuit support policies in various regions present a differentiated competitive landscape[3][4]:

Region	Upper Limit of Tape-Out Subsidy	R&D Investment Reward	Major Project Subsidy	EDA Support
Hangzhou Xiaoshan	RMB 10 million (for 28nm and below)	RMB 50 million	RMB 100 million (30% for R&D + 20% for equipment)	RMB 20 million
Chongqing High-Tech Zone	RMB 30 million	RMB 50 million	RMB 50 million	RMB 30 million
Beijing Haidian	RMB 15 million (RMB 8 million for 14nm and below)	-	-	-
Guangzhou Huangpu	RMB 5 million	RMB 10 million (for “small-scale enterprises upgrading to regulated enterprises”)	-	RMB 1 million (for procurement)
Shenzhen	-	-	RMB 30 million (for “list and tackle key problems” mechanism)	-
Shanghai Lingang	-	-	RMB 1 billion (for major leading projects)	-
Wuxi	RMB 6 million	-	RMB 60 million (for settlement rewards)	-

• The major project subsidy in Hangzhou Xiaoshan is up to RMB 100 million, the highest single-item support among local policies[3]
• The R&D investment reward in Chongqing High-Tech Zone covers all links, with a maximum of RMB 50 million
• Both regions emphasize key breakthroughs in “bottleneck” links

• Policies in Guangzhou Huangpu focus on
  tape-out and high-end chip design
• Highlight support for high-end chips such as CPU, GPU, FPGA, as well as emerging fields including AI chips, optical chips, and automotive-grade chips
• Strengthen industrial chain collaboration and ecological construction

• Shanghai Lingang focuses on breakthroughs in “bottleneck” links of equipment and materials (maximum support ratio of 30%)
• Shenzhen adopts the “list and tackle key problems” mechanism, emphasizing technology innovation orientation
• Guangzhou emphasizes industrial collaboration in the Guangdong-Hong Kong-Macao Greater Bay Area, building the “core hub for the third pole of China’s integrated circuit industry”

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• The Sci-Tech Innovation Chip Index (000685.CSI) rose by over 60% in 2025, becoming one of the best-performing sectors of the year[5]
• In the first three quarters of 2025, the total revenue of the semiconductor sector reached RMB 479.378 billion, a year-on-year increase of 11.49%
• Net profit attributable to parent companies reached RMB 41.353 billion, with a year-on-year growth rate of as high as 52.98%
• The profit growth rate is significantly higher than the revenue growth rate, reflecting a substantial improvement in the overall profitability of the industry[6]

Company	2024 Net Profit Attributable to Parent Companies	Year-on-Year Growth Rate	Business Highlights
NAURA Technology Group (北方华创)	RMB 5.621 billion	+44.17%	Replaced SMIC (中芯国际) as the “profit king” of A-Share semiconductors[7]
AMEC (中微公司)	RMB 1.9 billion (+46.40% in the first three quarters)	-	World-leading in etching equipment
Cambricon (寒武纪)	-	-	Its stock price once surpassed Kweichow Moutai to become the “stock king” of A-Shares, with a market value exceeding RMB 643 billion[6]

• Benefit Logic
  : Guangzhou’s policies provide a 40% subsidy for MPW tape-out and full-mask first tape-out, with a maximum of RMB 5 million per enterprise per year
• Beneficiary Targets
  : A-Listed chip design enterprises, especially those engaged in R&D of AI chips and high-end sensors
• Policy Effect
  : Significantly reduces R&D costs, improves corporate cash flow, and accelerates product iteration

• Benefit Logic
  : 20% subsidy for equipment procurement for technological transformation, with a maximum of RMB 30 million per project
• Policy Effect
  : Stimulates equipment procurement demand from wafer manufacturing enterprises, and leading equipment enterprises such as NAURA Technology Group and AMEC are expected to benefit
• Market Data
  : In the first half of 2025, NAURA Technology Group’s revenue reached approximately USD 2.2 billion, a year-on-year increase of 31%[8]

• Benefit Logic
  : Maximum reward of RMB 10 million for industrial chain collaboration, and maximum support of RMB 15 million for newly introduced packaging and testing module enterprises
• Policy Effect
  : Strengthens collaboration between upstream and downstream enterprises, and promotes the emergence of industrial cluster effects

Theme	Logic	Beneficiary Targets
Domestic Substitution	External technological restrictions force independent controllability, and policies continue to intensify	NAURA Technology Group, AMEC, Topping Microelectronics (拓荆科技)
AI Computing Power Chips	Explosive demand for computing power in the AI era, and domestic AI chips are accelerating penetration	Cambricon, Hygon Information (海光信息), SMIC
Capacity Expansion for Mature Processes	Localization rate of mature processes increases, driving strong demand for equipment	Leading equipment enterprises and material enterprises
Technological Innovation	Emerging directions such as advanced packaging and third-generation semiconductors	TFME (通富微电), Changjiang Electronics Technology (长电科技)

• The tech growth sector should be the core allocation, with a recommended proportion of over 40%
• The allocation proportion for semiconductor equipment and materials should be around 15%[5]
• Adopt a “core + satellite” strategy: Allocate core positions to leading enterprises in high-boom themes, and allocate satellite positions to flexible sub-sectors

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• Market size of China’s semiconductor industry: Reached RMB 1.7567 trillion in 2024, and is expected to exceed RMB 2 trillion in 2025[7]
• Semiconductor equipment market in mainland China: Reached sales of USD 49.54 billion in 2024, accounting for 42.34% of the global share, ranking first in the world for five consecutive years[8]
• The CAGR from 2020 to 2024 reached 21.47%, significantly higher than the global industry growth rate

Sub-Sector	Localization Rate	Policy Effect
Photoresist Stripping and Cleaning Equipment	>50%	Breakthrough achieved
Etching Equipment for Mature Processes	>50%	Basic coverage achieved
Thin Film Deposition Equipment	Rapidly increasing	Basic coverage for 28nm and above processes
Lithography Equipment	<20%	Still a bottleneck

:

• Mandatory requirement that “chip manufacturers must use ≥50% domestic equipment for new production capacity” (new regulation issued in December 2025)[4]
• The third phase of the National Integrated Circuit Industry Investment Fund (Big Fund III) has a scale of RMB 344 billion, focusing on investment in the entire integrated circuit industrial chain
• Tax incentives implemented: Integrated circuit manufacturing enterprises with processes of 28nm/65nm/130nm and below are eligible for corporate income tax reductions

• SMIC
  : Completed mass production of 14nm FinFET process, with a total of over 14,000 authorized patents (86.8% are invention patents)[6]
• NAURA Technology Group
  : Covers all core semiconductor equipment categories except lithography equipment, with significant platform advantages
• Cambricon
  : Its AI chip technology has reached international advanced levels, and its stock price once topped A-Shares as the “stock king”

1. Capital Support Effect
   • The 20% equipment procurement subsidy effectively reduces the capital expenditure pressure of enterprises
   • The 40% tape-out subsidy significantly reduces the R&D costs of design enterprises
   • The RMB 344 billion investment from Big Fund III provides long-term capital support for industrial development

2. Industrial Chain Collaboration Effect
   • Guangzhou’s policies emphasize “building an entire industrial chain covering design, manufacturing, materials, equipment and parts, and packaging and testing links”
   • The RMB 10 million industrial chain collaboration reward promotes close cooperation between upstream and downstream enterprises
   • Forms a positive cycle of “process breakthrough - capacity expansion - ecological improvement”[6]

3. Talent Aggregation Effect
   • Maximum reward of RMB 5 million for high-end talents/teams
   • Talent policies such as “one person applies, the whole family settles down” enhance attractiveness
   • Lays a human capital foundation to support sustainable industrial development

1. Resource Dispersion Caused by Policy Differences Across Regions
   • Significant differences in subsidy intensities across regions (e.g., RMB 100 million in Hangzhou vs. limited amounts in Guangzhou)
   • Risk of redundant construction and resource waste
   • Requires higher-level overall coordination

2. High-End Process Breakthroughs Still Take Time
   • Localization rate of lithography equipment is less than 20%
   • There is still a gap between advanced processes (7nm and below) and international leading levels
   • External technological restrictions continue to tighten

3. Industrial Ecology Still Needs Improvement
   • Links such as EDA tools and high-end IP are still bottlenecks
   • There is a significant gap in software ecology compared with overseas leading enterprises
   • Requires longer-term accumulation

• Rapid increase in the localization rate of mature processes (28nm and above)
• Sustained growth in order volumes of equipment enterprises
• Accelerated policy-driven capacity expansion

• Expected breakthroughs in key technologies for advanced processes
• Localization rate of semiconductor equipment reaches over 50%
• Significant enhancement of independent controllability of the industrial chain

• Access to core links of the global semiconductor industrial chain
• Formation of internationally competitive leading enterprises
• Realization of the leap from “catching up” to “keeping pace” and even “leading”

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Target	Ticker	Logic	Rating
NAURA Technology Group (北方华创)	002371.SZ	Platform-type equipment leader, benefits from domestic substitution	Buy
AMEC (中微公司)	688012.SH	World-leading in etching equipment	Buy
Topping Microelectronics (拓荆科技)	688072.SH	Leading in thin film deposition equipment	Buy
Cambricon (寒武纪)	688256.SH	AI chip leader with technological breakthroughs	Accumulate
SMIC (中芯国际)	688981.SH	Wafer foundry leader with advanced process breakthroughs	Accumulate
TFME (通富微电)	002156.SZ	Advanced packaging, benefits from AI computing power demand	Accumulate

• Core Allocation (60-70%)
  : Leading semiconductor equipment and material enterprises (e.g., NAURA Technology Group, AMEC)
• Theme Allocation (20-30%)
  : AI chip design enterprises (e.g., Cambricon, Hygon Information)
• Satellite Allocation (10-20%)
  : Emerging directions such as advanced packaging and third-generation semiconductors

1. Policy Implementation Risk
   : Adjustments to local fiscal budgets may affect the implementation intensity of policies
2. Technological Risk
   : R&D progress of advanced processes may fall short of expectations
3. Geopolitical Risk
   : Continued tightening of overseas technological restrictions may affect equipment access
4. Market Risk
   : Cyclical fluctuations in the semiconductor industry may put pressure on valuations
5. Competition Risk
   : Intensified industry competition may compress profit margins

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The intensive introduction of integrated circuit industry support policies in Guangzhou and other regions has a

on A-Share semiconductor sector investments:

• ✅
  Short-Term
  : Effectively reduces enterprise costs, improves profitability, and stimulates investment willingness
• ✅
  Medium-Term
  : Accelerates the domestic substitution process and promotes collaborative development of the industrial chain
• ✅
  Long-Term
  : Lays a solid foundation for enhancing the competitiveness of domestic chip manufacturing

• The semiconductor sector has
  long-term investment value
  , with domestic substitution as the core driving force
• The industry is expected to continue its high boom in 2026, with global semiconductor sales expected to exceed USD 1 trillion[9]
• Capital market reforms such as the STAR Market provide smoother financing channels for hard technology enterprises

Against the backdrop of the 15th Five-Year Plan clearly proposing to “adopt extraordinary measures to promote key core technology research in key fields such as integrated circuits across the entire chain”, the semiconductor industry, as a core component of national strategic scientific and technological strength, is expected to continue to receive strong policy support. The intensive introduction of local policies forms synergy with national strategies, jointly promoting China’s semiconductor industry to climb to the high-end of the global value chain.

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[1] Guangzhou Bureau of Industry and Information Technology. Draft for Comments of the “Several Policies of Guangzhou on Promoting High-Quality Development of the Integrated Circuit Industry Across the Entire Chain During the 15th Five-Year Plan Period”. 2025.

[2] Economic and Information Technology Bureau of Guangzhou Development Zone. “Several Policy Measures of Guangzhou Development Zone and Huangpu District to Support the High-Quality Development of the Integrated Circuit Industry”. Sui Kai Jing Xin Gui Zi [2025] No. 4, June 16, 2025.

[3] China Electronics News. “A Look at Integrated Circuit Support Policies Across Regions”. August 21, 2025.

[4] Eastmoney.com. “New Regulation Requiring 50% Domestic Equipment in Chip Manufacturing”. December 30, 2025.

[5] Fortune Account. “Still Bullish on the Upside of the Chip Industry in 2026”. January 5, 2026.

[6] Beijing Business Daily. “2025 Technology and Capital Report | Domestic Substitution of Chips”. December 14, 2025.

[7] Securities Times. “NAURA Replaces SMIC as the ‘Profit King’ of A-Share Semiconductors”. May 7, 2025.

[8] Futu Information. “Semiconductor Equipment Industry: 2026 Outlook Under Domestic Substitution”. 2025.

[9] Bank of America Securities. “2026 Outlook: Advancing Amid Volatility, Still Positive”. December 2025.