Chinese tech shares tumble after U.S. publishes new export rules (updated)

Hua Hong Grace Semiconductor

10/10/2022 04:05

(Adds research note, more shares)
       SHANGHAI, Oct 10 (Reuters) - Shares in Chinese tech
giants Alibaba Group  9988.HK  and Tencent  0700.HK  as well as
in chipmakers slumped on Monday, following the latest U.S.
crackdown on China's chipmaking industry to slow 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 semiconductor chips made anywhere in the world with U.S.
equipment.
    The rules include blocking shipments of a broad array of
chips for use in Chinese supercomputing systems that nations
around the world rely on to develop nuclear weapons and other
military technologies.
    Some industry experts say the ban could also hit commercial
data centers at Chinese tech giants.
    Shares in Alibaba and Tencent dropped 3.3% and 1.7%,
respectively, by 0258 GMT on Monday.
    An index measuring China's semiconductor firms  .CSIH30184 
tumbled nearly 6%, and Shanghai's tech-focused board STAR Market
  .STAR50  declined 3.6%.
    The raft of measures could amount to the biggest shift in
U.S. policy toward shipping technology to China since the 1990s.
If effective, they could hobble China's chip manufacturing
industry by forcing American and foreign companies that use U.S.
technology to cut off support for some of China's leading
factories and chip designers.
    China's Semiconductor Manufacturing International Corp
(SMIC)  0981.HK  dropped 3.8%, NAURA Technology Group Co
 002371.SZ  sank 10% by the daily limit, and Hua Hong
Semiconductor Ltd  1347.HK  plunged 9.5%.
    Citi analysts said in a note that the U.S. restrictions
could make development of China's advanced chip technologies
even more challenging.
    "(But) they should increase Chinese semiconductor companies’
propensity to purchase domestic equipment, especially for mature
technology nodes, due to supply-chain security," the note said.
 (Reporting by Jason Xue and Josh Horwitz; Editing by
Muralikumar Anantharaman)
 ((Jason.Xue@thomsonreuters.com;))