Chinese insurance companies, including PICC, are designing tailor-made insurance services to promote the use of domestically developed chip products as part of the nation's broader push to boost the homegrown semiconductor sector, reported China Daily on September 15.

Such insurance services, which have already been used to support homegrown auto chip companies last year, can help Chinese semiconductor enterprises lower R&D expenses, accelerate efforts to achieve breakthroughs in core technologies, and help stabilize semiconductor industrial and supply chains as Washington continues to tighten export controls on chip-making equipment and AI chips to China. 

Insurance companies such as PICC are drafting plans to promote use of domestic chip-making equipment such as lithography machines and etching machines, and EDA tools which are important to chip design. 

Possible services include that if losses result from using domestic chip products, the compensation amount will be judged in accordance with the loss and the amount of insurance, said the China Daily report. 

The move is part of Chinese insurance industry's broader efforts to use creative financial services to boost high-quality development of the chip industry, with focus on helping the sector overcome crucial technological bottlenecks.

Last year, the Ministry of Industry and Information Technology encouraged insurers to roll out services that can boost local automakers' confidence in using indigenously produced chips, so as to help ease auto chip shortages.

Four Chinese chip design companies inked agreements with three local insurance companies in June 2021 to pilot such insurance services.

In October, 18 Chinese insurance companies and reinsurance companies－including PICC－also established an alliance in Shanghai to offer insurance services for chip companies to help them innovate, said China Daily in the report.

The China Banking and Insurance Regulatory Commission's Shanghai office said in July that the alliance had provided customers with an insurance coverage of RMB590 billion ($84.8 billion).

Xiao Jianyou, vice-president of PICC, said at a forum earlier this month that the company now provides 12 integrated circuit companies with an insurance coverage of RMB700 billion ($100.41 billion).

Hu Weiwu, chairman of Loongson Technology Corp(龙芯中科), a chip designer behind the country's first self-developed general-purpose microprocessor, said in an earlier interview with China Daily as domestic semiconductor companies make progress, efforts are needed to support homegrown innovation of chips.

Zhong Xinlong, a senior consultant at the China Center for Information Industry Development Consultancy, said compared with including domestic chips into government procurement plans, chip industry associations and financial companies are now exploring more market-driven ways to support the innovation of Chinese chip companies.