What's new

China tech shares sink as U.S. export curbs raise chip sector hurdles

Viet

ELITE MEMBER
Jun 18, 2012
28,073
0
20,024
Country
Viet Nam
Location
Germany

World Artificial Intelligence Conference in Shanghai

World Artificial Intelligence Conference in Shanghai
Tencent headquarters in Shenzhen

Tencent headquarters in Shenzhen

By Josh Horwitz and Jason Xue
SHANGHAI, Oct 10 (Reuters) - Shares in Chinese tech giants Alibaba Group and Tencent as well as in chipmakers slumped on Monday, as investors were spooked by new U.S. export control measures aimed at slowing Beijing's technological and military advances.

The Biden administration published a sweeping set of export controls on Friday, including a measure to cut China off from certain semiconductors made anywhere in the world with U.S. equipment.

The raft of measures, some of which take immediate effect, could amount to the biggest shift in U.S. policy toward exporting technology to China since the 1990s.

Experts said the new rules will have a broad impact, slowing China's efforts to develop its own chip industry and advance commercial and state research involving military weapons, artificial intelligence, data centres and many other areas that are powered by supercomputers and high-end chips.

The new controls also come at a time when the global chip industry is already facing major headwinds from tumbling demand post-COVID in computers, smartphones and other electronic devices and has warned of weak revenue.

The most immediate impact is likely to be felt by Chinese chipmakers, they said.

Under the new regulations, U.S. companies must cease supplying Chinese chipmakers with equipment that can produce relatively advanced chips - logic chips under 16 nanometers (nm), DRAM chips below 18 nm, and NAND chips with 28 layers or more - unless they first obtain a license.

That's set to affect China's top contract chipmakers - Semiconductor Manufacturing International Corp (SMIC) and Hua Hong Semiconductor Ltd - as well as state-backed leading memory chipmakers Yangtze Memory Technologies Co Ltd (YMTC) and Changxin Memory Technologies (CXMT).

"The measures will hobble the Chinese chip sector and will scupper numerous growth plans and potentially set back innovation in both the East and the West," said Danni Hewson, an analyst at AJ Bell.


"There will be plenty of boardrooms hosting top level meetings over the next few days considering the implications of U.S. export controls."

Chinese foundries have a fraction of the global contract chip market, which is dominated by Taiwan's TSMC, but they control about 70% of the domestic market, underscoring Beijing's efforts to boost self-sufficiency in chips.

In memory chips, industry watchers have pegged YMTC and CXMT as China's best hopes for breaking into the global market, going neck and neck with top players such as Samsung Electronics and Micron Technology.

The new regulations will now pose major hurdles for the two Chinese memory chipmakers, analysts said.

"The advancement of memory will be limited as there is no opportunity to upgrade process equipment, no opportunity to expand production, and the market will be lost," Gu Wenjun, who leads research at Shanghai-based consultancy ICWise, wrote in a research note.

The blocking of equipment supplies for high-end chip production could also have a cascading impact on simpler chips, analysts said.

Stewart Randall, who tracks China's semiconductor sector at Shanghai-based consultancy Intralink, said that for NAND chips, the same equipment used to produce 128-layer NAND can also produce simpler 64-layer NAND.

China's foreign ministry spokesperson Mao Ning on Saturday called the move an abuse of trade measures designed to reinforce the United States' "technological hegemony".

U.S. toolmakers now required to halt shipments to wholly Chinese-owned factories producing advanced logic chips include KLA Corp, Lam Research Corp and Applied Materials Inc , which pushed their shares down about 4% and 8%.

The Philadelphia semiconductor index fell 3.4%.

In advanced AI chips - Nvidia Corp and Advanced Micro Devices Inc - which are among the major vendors supplying to China, slipped about 3% each.

"This could hardly come at a worse time for Nvidia given that it's already faced a highly challenging period due to supply chain snarl-ups and slowing demand for gaming consoles," said Susannah Streeter, an analyst at Hargreaves Lansdown.

SUPERCOMPUTERS, DATA CENTERS

The rules also include blocking shipments of a broad array of chips for use in Chinese supercomputing systems which can be used to develop nuclear weapons and other military technologies.

Some industry experts say the ban could also hit commercial data centres at Chinese tech giants. Shares in e-commerce company Alibaba and social media and gaming company Tencent, both of which rely on data centres extensively, dropped 3.3% and 2.5%, respectively.

A steep decline in tech shares led China's market down on its first post-Golden Week holiday trading on Monday.

An index measuring China's semiconductor firms tumbled nearly 7%, and Shanghai's tech-focused board STAR Market declined 4.5%.

SMIC dropped 4%, chip equipment maker NAURA Technology Group Co sank 10% by the daily limit, and Hua Hong Semiconductor plunged 9.5%.

Shares in AI research firm SenseTime and surveillance equipment maker Dahua Technology, which will be cut off from chips made using U.S. technologies, tumbled 5.7% and 10%, respectively.

The impact on tech shares outside of China was limited on Monday as financial markets in South Korea, Japan and Taiwan were closed for separate holidays.

European tech index slipped 0.8%, while New York-listed shares of Chinese firms Alibaba, JD.com and Pinduoduo fell between 3% and 7%.

Analysts expect the impact on TSMC, the world's top contract chipmaker, to be limited as most of its advanced chip orders comes from U.S.-based customers such as Apple and Qualcomm, although it generates around 10-12% of its revenue from China.

South Korea on Saturday also expected no significant disruption to equipment supply for Samsung and SK Hynix's existing chip production in China.

(Reporting by Josh Horwitz and Jason Xue; Additional reporting by Anisha Sircar and Medha Singh in Bengaluru; Writing by Miyoung Kim; Editing by Muralikumar Anantharaman)

 

Beast

ELITE MEMBER
Feb 5, 2011
30,546
-51
67,152
Country
China
Location
China
Lol..


  • Equipment stocks lead the declines among US companies
  • The escalation carries risk of retaliation, Bernstein says

Don't worry, @Viet US companies don't get hurt from this curtail. Another fake news from Bloomberg, right?
 

Menthol

SENIOR MEMBER
Aug 2, 2017
3,221
0
2,554
Country
Indonesia
Location
Indonesia
Japan semiconductor was crushed.

So does China this time.

The only solution for China is to become fully independent in both hardware and software.
 

Viet

ELITE MEMBER
Jun 18, 2012
28,073
0
20,024
Country
Viet Nam
Location
Germany
Lol..


  • Equipment stocks lead the declines among US companies
  • The escalation carries risk of retaliation, Bernstein says

Don't worry, @Viet US companies don't get hurt from this curtail. Another fake news from Bloomberg, right?
US stocks get heavy beating but it’s all about to stop Ccp from using chips in military and business. So ok. Politics always wins over business.
 

Users Who Are Viewing This Thread (Total: 1, Members: 0, Guests: 1)


Top Bottom