April 27, 2021
The Shenzhen government is putting its thumb on the scale for Huawei and ZTE with a 5 billion yuan (US$771 million) research fund and plans to raise a further 10 billion yuan ($1.5 billion) in private investment.
The municipal government, home to the two vendors, has issued a draft proposal to speed up 5G development and boost the "5G industry chain" in the southern Chinese city.
A discussion paper from the Shenzhen Industrial and Information Technology Bureau proposes tipping 1 billion yuan ($154 million) a year into local 5G efforts for the next five years.
Figure 1: Helping hand: Shenzhen's plans to aid the domestic 5G industry will give Huawei and ZTE a boost.
With the most advanced chips and chip manufacture technologies out of reach because of the sanctions on Huawei, it says 5G network components and chips are the priority.
Specifically, it refers to "missing links in the industry chain" such as 5G baseband and RF chips, optical communication chips, server CPUs and server storage chips, proposing grants of up to 30 million yuan ($4.6 million) per company.
It also suggests building "a batch of 5G specialized industrial parks," with incentives of up to 50 million yuan ($7.7 million) per enterprise to encourage them to set up.
Companies that invest more than 100 million yuan ($15.4 million) in new 5G-related production capacity should receive up to 10 million yuan ($1.5 million).
Besides the cash grants, the paper recommends the transfer of "large areas of contiguous land" to individual firms to encourage them to manage their allocated space in a unified manner.
It would also offer subsidies of up to 40% of the total costs for device companies buying Shenzhen-built 5G chips.
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Without offering any specifics, the paper says the city government should encourage private capital to establish a 10 billion yuan industry development fund to further increase 5G investment.
It should also support 5G-related companies to go public or to issue bonds or other debt.
The discussion paper also urges funding for 6G development, with the aim of "occupying the strategic high points of international mobile communications standards and spectrum at an early stage."
A city that did not exist four decades ago, Shenzhen today is China's high-tech capital and the base for tech brands such as Tencent, DJI and Skyworth.
It has aided the electronics manufacturing sector with cash grants, land subsidies and tax holidays. According to the Wall Street Journal, Huawei has been a beneficiary of a series of land discounts and tax waivers in Shenzhen and neighboring Dongguan since the early 1990s.
— Robert Clark, contributing editor, special to Light Reading
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