China to give "strategic" support to microchip sector: Xinhua

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SHANGHAI | Sat Apr 16, 2011 5:09am EDT

(Reuters) - China plans to support its integrated circuit sector as a strategically important industry over the next five years, aiming for over a fourth of microchips used in the country by 2015 to be made in China, Xinhua news agency said on Saturday.

The support for the sector is just the latest step in a broader push by Beijing to promote home-grown high-tech and other industries, as the country seeks to reduce its reliance on cheap manufactured exports for growth -- and on foreign companies for imports of high-tech goods.

Xinhua cited Yang Xueshan, vice minister of industry and information technology, as saying the ministry expected Chinese companies to make 27.5 percent of the integrated circuits used in the country by 2015, up from about 20 percent now.

The plan for the sector included the development of more proprietary intellectual property, the state-run news agency added.

That dovetails with plans to spur up to $1.5 trillion of investment over five years in seven strategic industries from alternative energy to biotechnology, as first reported by Reuters last December.

From aerospace to microchips, China is aiming to eventually foster heavyweights able to take on industry giants such as Boeing and Intel.

That push has already helped to drag down costs, and with them, profit margins, in sectors ranging from solar panels to liquid crystal display panels (LCDs), in which Chinese producers have contributed to an abundant supply.

(Reporting by Jason Subler; Editing by Andrew Marshall)