Chinese chip firms say they can withstand new US export curbs
03/12/2024 07:30
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Chinese chip firms vow to localise supply chains amid US
curbs
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US curbs may not disrupt Chinese chip progress, analysts
say
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CXMT exclusion brings relief to South Korean chip
suppliers
By Eduardo Baptista and Heekyong Yang
BEIJING/SEOUL, Dec 3 (Reuters) - Chinese chip companies
targeted by Washington with fresh export controls have vowed to
speed up supply chain localisation and said they would be able
to continue production thanks to recent efforts to build
equipment stockpiles.
The latest curbs, the third U.S. crackdown on the Chinese
sector in three years, focused on chipmaking equipment, software
and high-bandwidth memory. They restrict exports to 140
companies, including chip equipment maker Naura Technology Group
002371.SZ and ACM Research 688082.SS .
Empyrean 301269.SZ , a maker of electronic design
automation (EDA) tools also known as Beijing Huada Jiutian
Technology, said its inclusion on the list would have little
impact on operations.
"The company will seize the development opportunity to
accelerate the localisation process of full-process EDA tools,"
it said in a stock market statement.
Jiangsu Nata Opto-Electronic Material 300346.SZ , which
manufactures materials used in chipmaking, told Chinese news
outlet Yicai it had stocked up and would also make domestic
substitutions, but did not provide specifics.
Others, such as semiconductor test systems provider Beijing
Huafeng Test & Control Technology 688200.SS , said they had
already fully localised their supply chain, the 21st Century
Business Herald newspaper reported.
While Chinese authorities called the move "economic
coercion", the measures appeared to have little impact on
chip-making stocks, which rose slightly on Tuesday as analysts
said the curbs were less stringent than feared.
MANAGEABLE DISRUPTION
The U.S. curbs target the "weakest spot" in the Chinese
semiconductor industry, which relies heavily on foreign
equipment for manufacturing, said Martijn Rasser, managing
director at Datenna, a data intelligence platform focused on
China's technology.
Capital expenditure by the Chinese chip industry next year
will likely fall by $10 billion, or about 30% year-on-year, to
$35 billion, as a result of these curbs, Jefferies analysts said
in a note.
But other analysts said the curbs may not have the desired
effect as Chinese chip firms have since last year ramped up
purchases of foreign made equipment from the likes of Dutch
lithography machine maker ASML ASML.AS and U.S. toolmaker Lam
Research LRCX.O .
For the first nine months of this year, China's imports of
semiconductor equipment increased by a third to $24.12 billion,
according to data from China Customs.
"This was as close to the continuation of the status quo in
terms of it's making things very difficult for manufacturers at
the leading-edge but it's not going to disrupt that progress any
more than the existing regulations," said Jeff Koch, an analyst
at research group SemiAnalysis.
CXMT EXCLUSION
The exclusion from the entity list of ChangXin Memory
Technologies (CXMT), China's leading manufacturer of a key
component in AI chips, surprised some.
The Biden administration says the restrictions are aimed at
limiting China's ability to access and produce chips that
advance AI for military applications or threaten U.S. national
security.
Shares of some South Korean equipment suppliers to CXMT
firmed on Tuesday after its exclusion. CXMT did not immediately
respond to a request for comment.
"The development has brought short-term relief to South
Korea's chip sector, as their China-bound revenue is unlikely to
be significantly affected for now," said Ryu Young-ho, an
analyst at NH Investment & Securities.
Shares of Jusung Engineering 036930.KQ , a CXMT supplier,
were up 7.7% in morning trading, after falling nearly 7% the
previous session amid concerns about the pending restrictions.
Mirae Corp 025560.KS , a South Korean chip equipment maker
that derived about 15% of its total revenue from CXMT in the
first half of this year, signed about 9 billion won ($6.41
million) worth of supply deals with CXMT this year so far. Its
shares rose 1.4% in morning trade, extending gains of 7% in the
previous session.
($1 = 1,403.3800 won)
(Reporting by Eduardo Baptista in Beijing and Heekyong Yang in
Seoul; Additional reporting by Beijing newsroom; Writing by
Brenda Goh; Editing by Sam Holmes)
((brenda.goh@thomsonreuters.com; +86 (0) 21 2083 0088; Reuters
Messaging: brenda.goh.thomsonreuters.com@reuters.net))