1. The 15th Five-Year Plan (2026–2030) — The Big Picture

If you’re a legal professional, compliance officer, or strategic planner working with Chinese semiconductor companies, you’ve probably noticed something changing. The policy environment isn’t just evolving — it’s being rebuilt from the ground up.

China’s semiconductor regulations in 2026 represent a fundamental shift in how the government approaches the industry. This isn’t tinkering around the edges. It’s a comprehensive, top-to-bottom restructuring of the policy framework.

1.1 Semiconductors Ranked First Among Six Emerging Pillar Industries

Perhaps the most telling signal is where semiconductors now sit in China’s industrial hierarchy. In August 2026, the Ministry of Industry and Information Technology confirmed that integrated circuits have been explicitly ranked first among the six emerging pillar industries for the 15th Five-Year Plan period.

According to National Development and Reform Commission Director Zheng Shanjie, these six industries generated approximately 6 trillion yuan (about US$840 billion) in output in 2025, and are expected to double to over 10 trillion yuan by 2030.

1.2 “Super-Conventional Measures” for Strategic Sectors

The policy language itself has shifted dramatically. The 15th Five-Year Plan explicitly calls for “super-conventional measures” to drive breakthroughs in strategic sectors including semiconductors, industrial machine tools, high-end instruments, basic software, advanced materials, and biomanufacturing. While the term is deliberately broad, it signals a willingness to deploy extraordinary policy tools — enhanced subsidies, prioritized government procurement, accelerated regulatory approvals, and intensified state-backed R&D investments.

1.3 The “New National System”

The plan also emphasizes leveraging the “new national system” (新型举国体制) — China’s updated version of the state-led innovation model. In practice, this means coordinated R&D across government, industry, and academia, concentrated resource allocation to priority technologies, state-backed “bottleneck-busting” projects, and integration of military and civilian technology development.

2. Key 2026 Policy Developments

2.1 March 2026: Two Sessions Pass the 15th Five-Year Plan

The 2026 Two Sessions (the annual meetings of China’s legislature and political advisory body) were dominated by semiconductor policy. The Government Work Report delivered by Premier Li Qiang confirmed that integrated circuits are now a “national strategic pillar” — a significant upgrade from their previous status as a “shortfall industry.”

Key announcements included: “Implement industrial innovation projects” — encouraging state-owned enterprises to open application scenarios; “full-chain promotion” of key core technology breakthroughs; and “decisive breakthroughs” in critical technologies including semiconductors. The message was unambiguous: semiconductors are no longer just a technology issue — they are a national security and economic sovereignty issue.

2.2 June 2026: MIIT “AI + Information Communications” Implementation Plan

In June 2026, the Ministry of Industry and Information Technology (MIIT) released the “Artificial Intelligence + Information Communications” Innovation Development Implementation Opinion (2026–2028). This plan has direct implications for the semiconductor industry:

• High-speed optoelectronic chips and switching chips are explicitly targeted for development
• Strengthening R&D and verification of all-optical switching devices and optoelectronic co-packaged devices
• Accelerating 400Gbps/800Gbps backbone transmission network construction

For foreign semiconductor companies, this creates both challenges and opportunities. China is actively seeking to develop domestic alternatives in optoelectronics and networking chips — but in the near term, it still needs foreign technology to build out its AI and communications infrastructure.

2.3 Local Governments Roll Out Support Policies Nationwide

It’s not just Beijing. Across China, provincial and municipal governments are implementing their own semiconductor support policies. In the Yangtze River Delta, local governments offer land and utility subsidies for new fab construction, R&D grants, talent housing benefits, and accelerated regulatory approvals. In the Pearl River Delta, policies focus on design and application ecosystem development and cross-border collaboration with Hong Kong and Macau.

3. Local Content Requirements — Critical for Foreign Suppliers

Here’s where policy starts to have direct, measurable impact on foreign businesses.

3.1 Silicon Wafer Localization Target: 70%

According to multiple reports, the Chinese government has set a target for domestic chipmakers to source at least 70% of their silicon wafers from domestic suppliers in 2026. This is described as an “informal but clear” requirement — meaning it’s not codified in law but is being enforced through administrative guidance and procurement pressure.

3.2 Equipment Localization Requirement: 50%

This isn’t the only localization target. China has also issued an informal requirement that at least 50% of equipment in new capacity additions must be domestic. For foreign equipment suppliers — from lithography to etching to deposition tools — this means the market for new fab equipment in China is being progressively walled off.

3.3 The Strategic Implication

For foreign suppliers, the implication is clear: you cannot rely on selling into China’s semiconductor market indefinitely without localizing production. Companies that want to maintain access to the world’s largest semiconductor market need to consider establishing joint ventures with Chinese partners, setting up local manufacturing or assembly operations, transferring technology to Chinese subsidiaries, or partnering with domestic suppliers to meet localization requirements.

4. Tax Incentives and Financial Support

While localization requirements create headwinds for foreign suppliers, China’s tax incentives and financial support programs create opportunities — for both domestic and foreign-invested enterprises that qualify.

Process Node	Tax Benefit
<28nm (with 15+ years operation)	10-year corporate income tax exemption
<65nm	“5 years exemption + 5 years 50% reduction”
<130nm	“2 years exemption + 3 years 50% reduction”

Source: National Development and Reform Commission, 2026 Tax Preference List Notice

To qualify, companies must meet “hard tech” criteria including R&D expenses accounting for at least 7% of total revenue and R&D personnel accounting for at least 25% of total staff.

4.2 R&D Expense Super Deduction

Equipment and material companies can claim an additional 120% super deduction on R&D expenses. For every 1 yuan spent on qualifying R&D, the company can deduct 1.2 yuan from its taxable income — a powerful incentive for innovation investment.

4.3 National Integrated Circuit Industry Investment Fund Phase III

Perhaps the most significant financial instrument is the National Integrated Circuit Industry Investment Fund — commonly known as the “Big Fund.” Phase III was established in May 2024 with registered capital of 344 billion yuan (approximately US$48 billion) — larger than the first two phases combined.

• First time state-owned “Big Six” banks have participated as investors
• ~70% of funds are concentrated on equipment and materials localization
• Remaining funds target advanced packaging and AI storage

5. Compliance Risks for Foreign Partners

5.1 Export Control Compliance

Foreign companies face a dual compliance burden. On the US/EU side, restrictions on exporting advanced semiconductor technology to China continue to evolve. On the Chinese side, China has been building out its own export control framework:

• April 2026: “Regulations on Industrial Chain and Supply Chain Security”
• April 2026: “Regulations on Countering Unjustified Foreign Extraterritorial Jurisdiction”
• July 2026: New “Regulations on Outbound Investment” imposing stricter controls on technology and data exports

5.2 The “Unreliable Entity List” and Other Tools

China has established several enforcement mechanisms that foreign companies need to be aware of:

• Unreliable Entity List — foreign entities that harm China’s national security can be restricted or banned from operating in China
• Export Control List — expanded to include strategic rare earth metals, electronic materials, and semiconductors
• Extraterritorial application — licensing requirements now extend to foreign manufacturers using Chinese materials and technology

5.3 Documentation Requirements

For international business transactions involving Chinese semiconductor companies, proper documentation is essential. Contracts and agreements must be properly executed and, in many cases, notarized or apostilled to be legally recognized across borders. Corporate registrations — verifying the legal status of Chinese partners requires access to official business registration records.

This is where ChinaBizInsight comes in. We provide official enterprise credit reports to verify the legal registration and operating status of Chinese companies, professional due diligence reports for comprehensive background checks, and document authentication services to ensure your documents are legally recognized.

6. Conclusion: A Market Being Reshaped

The 2026 policy landscape represents a fundamental reshaping of China’s semiconductor industry. The government is deploying the full range of policy tools — planning, subsidies, tax incentives, localization requirements, and state-backed investment — to build a domestically controlled semiconductor ecosystem.

📚 References

1. National Development and Reform Commission. (2026, August 28). Press Conference on 15th Five-Year Plan Implementation.
2. Ministry of Industry and Information Technology. (2026, August 27). 15th Five-Year Plan Industry Briefing.
3. National Development and Reform Commission et al. (2026, April 9). Notice on 2026 Tax Preference List for IC and Software Enterprises.
4. State Council. (2026). Government Work Report.
5. Ministry of Industry and Information Technology. (2026, June). “AI + Information Communications” Innovation Development Implementation Opinion (2026–2028).
6. Nikkei Asia. (2026, May 5). China Sets 70% Domestic Wafer Target.
7. Reuters. (2025). China’s Informal 50% Domestic Equipment Requirement.
8. National Integrated Circuit Industry Investment Fund. (2024). Phase III Establishment Announcement.