NOTICE OF MOF, MII, AND NDRC ON PRINTING AND DISTRIBUTING THE INTERIM MEASURES FOR THE MANAGEMENT OF THE SPECIAL FUND FOR THE RESEARCH AND DEVELOPMENT OF INTEGRATED CIRCUIT INDUSTRY

Ministry of Finance, Ministry of Information Industry, National Development and Reform Commission

Notice of MOF, MII, and NDRC on Printing and Distributing the Interim Measures for the Management of the Special Fund for the Research
and Development of Integrated Circuit Industry

No. 132 [2005] of the Ministry of Finance

The public finance departments (bureaus), the information industry departments (bureaus) and the development and reform commissions
of all provinces, autonomous regions, municipalities directly under the Central Government, and cities specifically designated in
the state plan:

With a view to encouraging integrated circuit enterprises to reinforce their research and development, the state has set up a special
fund for the research and development of integrated circuit industry. The Interim Measures for the Management of the Special Fund
for the Research and Development of Integrated Circuit Industry are hereby printed and distributed to you. Please make an announcement
of the Interim Measures accordingly and take effective measures to inform all relevant enterprises within your respective areas.

the Ministry of Finance

the Ministry of Information Industry

the National Development and Reform Commission

March 23, 2005 Attachment:Interim Measures for the Management of the Special Fund for the Research and Development of Integrated Circuit Industry

Chapter I General Provisions

Article 1

With a view to supporting the development of the integrated circuit industry, regulating the management of the special fund for the
research and development of the integrated circuit industry (hereinafter referred to as special fund for R&D) making full use of
the fund, the present Measures are formulated according to relevant provisions of the Budget Law of the People￿￿s Republic of China
and the requirements of related industrial policies of the state.

Article 2

The term ￿￿special fund for R&D￿￿ as mentioned in the present Measures refers to the fund arranged by the central finance budget and
exclusively used for supporting the research and development of the integrated circuit industry.

Article 3

The management and use of the special fund for R&D shall abide by the following principles:

(1)

being consistent with the guidelines of the state￿￿s industrial policy;

(2)

meeting the requirements as specified in the Guide to the Application for the special fund for R&D;

(3)

leading the integrated circuit industry to accelerate the technological creation and product development and to enhance the capacity
of research and development and level of industrialization;

(4)

promoting the combination of production, study and research, encouraging joint development;

(5)

being propitious to cultivating, bringing in and awarding the talents of the integrated circuit industry;

(6)

being scientific and highly efficient.

Chapter II Qualifications for Application

Article 4

An enterprise applying for the special fund for R&D shall meet the following conditions:

(1)

being an independent legal person enterprise engaged in the design, manufacturing, package or test of integrated circuits, which is
registered within the territory of the People￿￿s Republic of China (excluding Hong Kong, Macao and Taiwan) and confirmed by the integrated
circuit determination competent department;

(2)

having a research and development plan that meets the requirements as specified in the Guide to the Application for the special fund
for R&D;

(3)

having the ability to carry out the research and development activities it applies for, and having sound internal management and accounting
systems;

(4)

running business under the law and paying taxes under the relevant regulations.

Article 5

An applicant, when applying for the special fund for R&D, shall provide the following materials :

(1)

an application for the special fund for R&D;

(2)

a photocopy of its business license;

(3)

a qualification certification;

(4)

its financial statements of the last two years audited by a lawful intermediary institution;

(5)

other materials as required by the examination committee.

Chapter III Procedures for Application and Management

Article 6

The special fund for R&D shall be subject to deliberation and official reply of the examination committee which shall be constituted
by the Ministry of Commerce, the National Development and Reform Commission and the Ministry of Information Industry.

Article 7

The procedures for application and management of the special fund for R&D shall be as follows:

(1)

Pursuant to the requirements of the examination committee, the National Development and Reform Commission shall, together with the
Ministry of Information Industry, organize experts to work out and issue a Guide to the Application for the special fund for R&D;

(2)

Any enterprise that meets the qualifications for application may, according to the Guide to the Application for special fund for R&D
and the requirements for application, file an application to the Ministry of Information Industry (Website: www. itfund.gov.cn; Address:
27 Courtyard, Wanshou Road. Beijing, Post Code: 100846);

(3)

The Ministry of Information Industry shall collect and sort out the application materials, put forward a special fund for R&D arrangement
plan upon deliberation, then submit the plan to the examination committee. After the plan is examined and approved by the examination
committee, the Ministry of Finance shall issue a fund budget.

Chapter IV Aid Standards and Use of Fund

Article 8

The special fund for R&D shall be in a form of gratuitous aid. The amount of aid to a single research and development activity shall
not exceed 50 % of the cost of such an activity.

Article 9

Except for the expenditure of research and development activity, the special fund for R&D shall not be used for any other purpose.
The special fund for R&D may be used for the following aspects of reference:

(1)

the expenses for human resources, including the expenses on cultivating, bringing in and awarding the integrated circuit talents;

(2)

the expenses for special instruments and equipment;

(3)

the special expenses for the consultation and equivalent services of the research and development activities;

(4)

the daily expenses directly incurred due to the research and development activities, such as the expenses on materials, supplies and
etc;

(5)

the indirect expenses directly incurred due to the research and development activities; and

(6)

the necessary expenses incurred due to the management of the special fund for R&D.

Chapter V Supervision and Management

Article 10

The institution authorized by the examination committee shall enter into an agreement with the enterprise which is granted an aid
of special fund for R&D.

Article 11

The examination committee shall supervise and manage the use of the special fund for R&D pursuant to the provisions of the agreement,
and the Ministry of Information Industry shall be responsible for the concrete work.

Chapter VI Supplementary Provisions

Article 12

After the end of a year, the Ministry of Information Industry shall prepare an annual final account statement for the special fund
for R&D, and shall submit it to the Ministry of Finance before the first day of March of the next year. Upon examination of the examination
committee, the Ministry of Finance shall issue an official reply.

Article 13

Any enterprise granted an aid of special fund for R&D shall strictly comply with the relevant laws and administrative regulations
of the state. The examination committee shall check and evaluate the performances of the special fund for R&D, and the concrete work
shall be organized by the Ministry of Information Industry.

Article 14

The present Measures shall come into force 30 days after the date of promulgation.

Article 15

The power to interpret the present Measures shall remain with the Ministry of Finance, the National Development and Reform Commission
and the Ministry of Industry.