Chinese Chipmaking Stocks Rise Amid U.S. Export Restrictions

Chinese chipmaking stocks saw an increase on Wednesday after the government advised against reliance on U.S. chips and urged businesses to purchase locally, following new U.S. export restrictions.

• Semiconductor Manufacturing International Corp (SMIC) (HK:0981), the largest chipmaker in China by volume, rose by 2.7% in Hong Kong trading.
• Hua Hong Semiconductor Ltd (HK:1347) and Shanghai Fudan Microelectronics Group Co Ltd (HK:1385) both gained approximately 1%.

Industry associations indicated that U.S. chips were now considered "no longer safe," promoting local alternatives as a response to Washington's recent export curbs.

This shift is expected to drive demand for domestic chipmaking companies, with major players like SMIC and Huawei competing with U.S. companies like NVIDIA Corporation (NASDAQ: NVDA) in the Chinese market.

The warning from Chinese authorities follows Washington's latest crackdown on China's chipmaking sector, marking its third significant restriction in three years, limiting access to essential chipmaking equipment.

In retaliation, China has begun blocking the export of vital minerals and metals to the U.S., signaling an escalation in the ongoing trade war. The situation could intensify with President-elect Donald Trump potentially imposing additional tariffs against China upon taking office in January.

Washington's efforts are aimed at containing China's access to the artificial intelligence sector, citing national security concerns, but have further strained the relationship between the two largest economies.