Semiconductor chips are seen on a circuit board of a computer in this illustration picture taken February 25, 2022. REUTERS/Florence Lo/Illustration
SHANGHAI, Aug 5 (Reuters) – Chinese chipmakers' shares jumped by the most in two years this week as House of Representatives Speaker Nancy Pelosi's visit to Taiwan heightened tensions with the U.S., driving patriotic bets on a sector Beijing sees as key to its rivalry with Washington.
The surge in interest in chipmaking stocks, which had lost more than a third of their value over the past year on valuation concerns, came after the U.S. Senate last week passed the "Chips and Science" Act to better compete with China. read more
China's semiconductor index (.CSIH30184) rose 6.8% on Friday to a four-month high, bringing the week's gains to 14.2%, the best weekly performance since mid-2020.
Although the U.S. Chip Act would further restrict the use of advanced U.S. technologies in China, while prodding more semiconductor investment in the U.S, some investors interpret it as good news for local Chinese players.
"Domestic chipmakers will have huge opportunities to replace imported products," said Niu Chunbao, director of investment at private fund house Wanji Asset, adding local players could see explosive growth.
This view was echoed by Guorong Securities, which said in a note that the U.S. Chip Act will "stimulate the development of China's semiconductor industry".
Shares in Shenzhen China Micro Semicon Co Ltd (688380.SS) soared 82% on their first day of trading in Shanghai, in contrast with weaker recent stock market debuts.
Chinese chipmaking giant Semiconductor Manufacturing International Corp (SMIC) jumped 7.1% in Hong Kong and 4.4% in Shanghai . The SSE STAR Chip Index (.STARCHIP) surged 8.3%.
But Chinese chipmakers are expensive compared with their global peers, at a time when the prospect of a global economic recession threatens chip demand.
The global industry, which suffered from supply-chain snags during the height of the COVID-19 pandemic, now faces weak demand as inflation and recession fears reduce orders for chips used in everything from cars to mobile phones.
China's sector trades at around 57 times earnings, and remains the priciest sector in China's stock market.
Our Standards: The Thomson Reuters Trust Principles.
Alibaba Group Holding Ltd , on Thursday reported flat quarterly revenue growth for the first time in its history, showing how China's COVID lockdowns have hit its business.
Reuters, the news and media division of Thomson Reuters, is the world’s largest multimedia news provider, reaching billions of people worldwide every day. Reuters provides business, financial, national and international news to professionals via desktop terminals, the world's media organizations, industry events and directly to consumers.
Build the strongest argument relying on authoritative content, attorney-editor expertise, and industry defining technology.
The most comprehensive solution to manage all your complex and ever-expanding tax and compliance needs.
The industry leader for online information for tax, accounting and finance professionals.
Access unmatched financial data, news and content in a highly-customised workflow experience on desktop, web and mobile.
Browse an unrivalled portfolio of real-time and historical market data and insights from worldwide sources and experts.
Screen for heightened risk individual and entities globally to help uncover hidden risks in business relationships and human networks.
All quotes delayed a minimum of 15 minutes. See here for a complete list of exchanges and delays.
© 2022 Reuters. All rights reserved
