Provisions of Tianjin Economic-Technological Development Area on Promoting Integrated Circuit Design Industry Development

Article 1 (Objective) In order to promote the integrated circuit design industry development in Tianjin Economic-Technological Development Area (hereinafter referred as TEDA), the Provisions are formulated.

Article 2 (Applicable Scope) The Provisions are applicable to the integrated circuit design enterprises (hereinafter referred as "Enterprise") recognized by Administrative Commission of TEDA (hereinafter referred as "TEDA AC") and registered and operated in TEDA.

Article 3 (Service Platform) To establish TEDA Public Service Platform for Integrated Circuit Design (hereinafter referred as "Service Platform"), which will provide software and hardware for the Enterprise, as well training and publication service, so as to accelerate the growth of IC design industry.

Article 4 (Special Fund) TEDA will set up "Special Fund for IC Design Industry Promotion" to offer related subsidies for construction of software and hardware in the Service Platform, operation cost support, the financial support for R&D of the Enterprise, tapeout and industrialization etc. The various support and subsidies referred in the Provisions will be disbursed from the cost and expenses in TEDA Scientific Development Fund.

Article 5 (Leader team of Industry Development) To establish Leader Team of IC Design Industry Development in TEDA (hereinafter referred as "leader team"), which will be responsible for the qualification, reorganization, final approval of the financial support for the Enterprise, the related construction of software and hardware in the Service Platform, and the approval of the relative operation cost. The Leader Team will consist of related leaders and consultant of TEDA, and relative departments including TEDA Investment Promotion Bureau, TEDA Finance Bureau, TEDA Science Development Bureau and Tianjin TEDA International Incubation Center (hereinafter referred as "Incubation Center").

Article 6 (Expert Team of Industrial Development) To establish Expert Team for IC Design Industry Development in TEDA (hereinafter referred as "Expert Team"), which will be responsible for the suggestion for Enterprise qualification, and professional technological instruction for the industry development. The Expert Team will consist of members of TEDA High-Tech Instruction Commission, and technical experts of IC design in China.

Article 7 (Executive Department) The office of Leader Team and Expert Team is located in the Incubation Center. The Incubation Center will be responsible for the qualification of the Enterprise, acceptance and initial review of the financial support application; for the detailed execution of the Provisions; for the management and operation of the Service Platform.
TEDA Science Development Bureau will be responsible for industrial instruction, and fulfillment of related policies of Tianjin and China.

TEDA Finance Bureau will be responsible for the execution and cash of all the financial support in the Provisions.

Article 8 (Links to Other Policies) The Enterprise applicable for the Provisions shall execute the related policies of Tianjin and China, as well < Provisions of Tianjin Economic-Technological Development Area on Promoting the Development of the High and New Technology Sectors>, and being compared with the Provisions, the parts which are supplementary shall be executed accordingly.

Article 9 (Standard for Qualification) The IC design enterprises which apply for the Provisions shall be qualified as followed:

(I)The registered capital of the Enterprise shall not be lower than 10 million RMB (for the enterprises which have been supported directly by TEDA according to relative preferential policies, shall not be qualified for enjoying the incentives of the Platform);

(II)With legal software licenses for design

(III)With high-level leading talents and technique team

(IV)With core technology which can be developed to be self-owned property right

(V)With clear product direction, and confirmed client intention with relative signed agreements

(VI)With practical and specific business development plan

Article 10 (Support for R&D) Certain financial support will be granted to the IC design enterprises which use EDA software of TEDA IC Design Service Platform, and the details are as followed:
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For the EDA software cost, the part below 1.5 million RMB shall enjoy 50% discount directly, and the part exceeding 1.5 million RMB shall enjoy 70% discount.
 
For the projects participating Multi-Project Wafer (MPW), 50% of the related project expenditure shall be subsidized.
 
Within 5 years, 10% of other kinds of R&D expenditure shall be supported and subsidized.
The above-mentioned support and subsidies for each Enterprise shall not exceed 5 million RMB each year.

Article 11 (Standard for R&D Expenditures) According to the related regulations in China, "R&D expenditures" shall be referred as the expenditures for basic research, application research and laboratory development activities, and the details are as followed:

(I) Employee
The annual salary of the employee engaged in R&D activities (also referred as "R&D staff"), including basic payment, bonus, allowance, subsidy, award at the end of the year, payment for over-time working and other expenditure related to the employment or the position.

(II) Direct Investment:
Referred to the related expenditure by the Enterprise for the raw materials for the R&D projects, such as usage fee of water and fuel (including gas and electricity) etc; purchase expenditure for the mold, samples, sample machines and normal testing methods for intermediate test and products trial-manufacturing which can not satisfy with the fixed assets standard, and also lab examination fee for trail products etc; simple maintenance fee for the instruments and equipments of R&D activities; leasing fee of the fixed assets rented in the method of operation leasing etc.
 
(III) Depreciation and Amortization of long-term deferred expenses
Including the depreciation fee of the instruments and equipment for R&D activities, and the building for R&D projects, and including Amortization of long-term deferred expenses of the re-construction, re-installation, decoration and reparation of the R&D infrastructure.

(IV) Design Expenditure
Referred as the expenditure for the design of process, technological regulations, operation characters, for the concept, development and manufacturing of new products and new progress,

(V) Equipment maintenance fee
Mainly including R&D expenditure during the engineering and preparation (such as R&D machines, molds and tools, changing the program of production and quality control, or formulating new methods and standards etc.)

(VI) Amortization of the Intangible Assets
Demanded by the R&D activities, the expenditure for purchasing the related special technology (including patents, non-patent invention, licenses, special technology, design and calculation methods etc) shall be amortized

(VII) Outsourced R&D expenditure
Referred as the expenditure for the outsourcing of the Enterprise for the R&D activities to other domestic companies, universities, research organizations, transformed academies, technological professional service organizations and overseas organizations (the achievements of the projects shall be owned by the Enterprise, and has a tie-relationship with the major business of the Enterprise.) The outsourced R&D expenditure shall be confirmed in the independent transaction principle.
In the qualification process, the outsourced R&D expenditure shall be calculated as 80% of the total R&D cost.

(VIII)Other Fee
Referred as he other fee expended in the R&D activities, such as office expenditure, communication expenditure, patents application and maintenance fee, R&D insurance for high-new technology etc, Generally the above-expenditure shall not exceed 10% of the total R&D expenditure, except for other regulations.

Article 12 (Support for Industrialization) The financial support shall be granted for the scale sales in large volume of the successfully developed chips, which will be equal to the total VAT contributed by the Enterprise that year. The term of the above financial support shall not exceed 3 years, by accumulated maximum of 5 million RMB in total.

For the Enterprise with public-listing plan, the incentives of Tianjin and TEDA for public-listed companies shall be enjoyed in priority, and for the successful transformed enterprises, the maximum support will be 250,000 RMB; for the ones being listed in Agency Share Transfer Market Quotation, the maximum will be 600,000 RMB; for the successfully public-listed in the overseas market, the maximum shall be 2 million RMB.

Article 13 (Office Support) For the IC Design enterprises registered in TEDA Incubator and Industrialization Base, according to < Provisions of Tianjin Economic-Technological Development Area on Promoting the Development of the High and New Technology Sectors >, the office rental subsidy shall be granted.

Article 14 (Process for Qualification) The process of related qualification in the Provisions is as followed:

(I)Obtain from the Incubation Center or download from www.teda.gov.cn and www.innovateda.org, and fill in the "Qualification Application Form", while preparing "Qualification Application Form" and all materials required.

(II)Submit "Qualification Application Form" and required materials to the Incubation Center;

(III)The qualification application will be accepted in time, and approved in time, which will be examined by the Incubation Center for the formats, and reported to the Leader Team for approval with the experts' comments.

Article 15 (Process for Incentives Application) For the qualified Enterprise applying for the related support and subsidies for R&D expenditure, MPW and industrialization, the process shall be as followed:

(I)Obtain from the Incubation Center or download from www.teda.gov.cn and www.innovateda.org , and fill in the "TEDA Science Development Fund Application and Approval Form", while preparing "TEDA Science Development Fund Application and Approval Form" and all materials required.

(II)Submit the "TEDA Science Development Fund Application and Approval Form" and all materials required to the Incubation Center

(III)Being initially reviewed by the Incubation Center, and reviewed by TEDA Science Development Bureau and TEDA Finance Bureau, the documents shall be submitted to the Leader Team being approved before being cashed;

(IV)The subsidy application will be accepted in time, and approved each half year, which will be cashed by TEDA Finance Bureau directly once in a half year.

Article 16 (Annual Inspection) The Incubation Center will be responsible for the qualified Enterprise which is enjoying the Provisions, in the 1st quarter each year. For the enterprises being failed to pass the annual inspection, the related incentives shall be suspended; with successive two years without passing the annual inspection, the qualification for enjoying the incentives shall be cancelled.

Article 17 (Right of Interpretation) TEDA Administrative Commission shall be responsible for the interpretation of these Provisions.

Article 18 (Date of Enforcement) The Provisions shall be executed from Jan.1st of 2008 to Dec. 31st, 2012, and will be adjusted according to the operation of the Platform and demands of the Enterprise.