(Yicai Global) April 25 -- Several Chinese cities have been supporting the development of the compound semiconductor industry amid surging demand for new energy vehicles, mobile phone base stations, data centers, and rail transit.

Wuxi has chosen compound semiconductors as one of the five industries it plans to focus on in the future. The city in eastern Jiangsu province also intends to make great efforts to develop the production of compound semiconductor materials such as gallium nitride and silicon carbide.

Making compound semiconductors, or chips made from two or more elements, has lower equipment requirements, needs less investment than integrated circuits, and does not rely on processing devices such as high-precision lithography machines, so it is crucial for China to make breakthroughs in this field, Wu Ling, chairman of the China Advanced Semiconductor Industry Innovation Alliance, told Yicai Global.

International rivalry has escalated from product and enterprise competition to industrial chain competition, and the next two to three years are critical for the development of the compound semiconductor industry, according to Gan Yong, an academician at the Chinese Academy of Engineering.

Changsha in central Hunan province will introduce policies to issue a total of CNY50 million (USD7.2 million) worth of subsidies to support the semiconductor and IC industries, including third-generation semiconductors.

Guangdong, the province with China’s biggest regional economy, plans to set up a CNY30 billion (USD4.4 billion) fund to invest in automotive chips, semiconductor material devices, and compound semiconductors. The southern province has already built compound semiconductor production lines in the cities of Guangzhou, Shenzhen, Zhuhai, and Dongguan.

Wuhan’s Donghu New Technology Development Zone will build a compound semiconductor industrial chain based in its Jiufengshan Science Park and Jiufengshan Laboratory, the area also known as Optics Valley recently announced.

As one of China’s four IC industry bases, Optics Valley has developed toward two industrial directions, storage and optical chips, with the scale of the latter accounting for half of the country’s total. It boasts more than 30,000 engineering technology and research talents in the semiconductor field.

Wuhan said it will offer investment subsidies of as much as CNY500 million (USD72.4 million) and innovation allowances of up to CNY30 million for the IC industry. More than 100 companies in the IC industrial chain are expected to be based in the Jiufengshan Science Park by 2025.

Editors: Shi Yi, Futura Costaglione