Semiconductor chips are seen on a circuit board of a computer in this illustrative image taken on February 25, 2022. Portal/Florence Lo/Illustration
SHANGHAI, Aug 5 (Portal) – Shares in Chinese chipmakers rose by their highest level in two years this week as House Speaker Nancy Pelosi’s visit to Taiwan heightened tensions with the US and fueled patriotic bets on a sector , which Beijing sees as key to its rivalry with Washington.
The surge in interest in chip stocks, which had lost more than a third of their value over the past year on valuation concerns, came after the US Senate passed the “Chips and Science” bill last week to better compete with China to be able to Continue reading
China’s semiconductor index (.CSIH30184) rose 6.8% to a four-month high on Friday, taking weekly gains to 14.2%, the best weekly performance since mid-2020.
Although the US Chip Act would further restrict the use of advanced US technologies in China while stimulating more semiconductor investment in the US, some investors interpret this as good news for local Chinese players.
“Domestic chipmakers will have tremendous opportunities to replace imported products,” said Niu Chunbao, director of investments at private fund house Wanji Asset, adding that local players could see explosive growth.
That view was shared by Guorong Securities, which said in a statement that the US Chip Act will “stimulate the development of China’s semiconductor industry.”
Shares of Shenzhen China Micro Semicon Co Ltd (688380.SS) are up 82% in their first day of trading in Shanghai, in contrast to weaker recent stock market debuts.
Chinese chipmaker Semiconductor Manufacturing International Corp (SMIC) gained 7.1% in Hong Kong and 4.4% in Shanghai. The SSE STAR Chip Index (.STARCHIP) rose 8.3%.
But Chinese chipmakers are expensive compared to their global peers at a time when the prospect of a global economic recession is threatening chip demand.
The global industry, which suffered from supply chain problems during the height of the COVID-19 pandemic, is now facing weak demand as inflation and recession fears reduce orders for chips used in everything from cars to cellphones.
China’s sector trades at around 57 times earnings and remains the most expensive sector in the Chinese stock market.
Reporting by Jason Xue, Samuel Shen and Brenda Goh; Editing by Alexander Smith
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