US-China trade tensions spark Chinese interest in chipmaking stocks

The rising tensions may positively impact China’s local chip manufacturers, experts claim

Trade

Shutterstock via Dennis

9 August 2022

A congressional visit to Taiwan by House Speaker Nancy Pelosi last week heightened tensions between the US and Beijing, causing shares of Chinese chipmakers to jump by the most in two years.

The news comes on the heels of the US Senate’s Chips & Science Act, passed on 27 July, that guarantees $52 billion in subsidies for US semiconductor manufacturers.

Albeit the chips act significantly hinders the use of US technologies in China, industry experts perceive the restriction as a positive development for local Chinese manufacturers.

Per reports, China’s semiconductor index grew by 6.8%, indicating a four-month high, and the best weekly performance since mid-2020.

“Domestic chipmakers will have huge opportunities to replace imported products,” said Niu Chunbao, director of investment at private fund house Wanji Asset.

Corroborating the trend are Shenzhen China Micro Semicon’s shares that skyrocketed to 82% on their first day of trading in Shanghai, despite weaker recent stock market debuts.

Similarly, Chinese chipmaking giant Semiconductor Manufacturing International Corp’s shares jumped 7.1% in Hong Kong and 4.4% in Shanghai.

Despite the burgeoning growth, concerns remain as to whether China can withstand inflation and recession’s negative impact on the chip-making industry. As matters stand, chips remain the priciest sector in China’s stock market.

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