Semiconductor shares in China surged yesterday after Reuters reported the US had ordered chipmaking giant Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) to halt shipments of advanced chips to Chinese customers, which investors believe could accelerate Beijing’s self-reliance efforts.
TSMC yesterday started to suspend shipments of certain sophisticated chips to some Chinese clients after receiving a letter from the US Department of Commerce imposing export restrictions on those products, Reuters reported on Sunday, citing an unnamed source.
The US imposed export restrictions on TSMC’s 7-nanometer or more advanced designs, Reuters reported.
Photo: Reuters
Investors figured that would encourage authorities to support China’s industry and bought shares in local makers, sending Semiconductor Manufacturing International Corp (SMIC, 中芯國際) stock up 4.7 percent to a record high.
SMIC is China’s largest foundry and the country’s main alternative to TSMC. It is known for helping Huawei Technologies Co (華為) produce chips used in its latest smartphones, including the Mate 60 and Pura 70.
The CSI Semiconductor Index jumped more than 6 percent during trading to hit a three-year high, while the CSI Integrated Circuits Index rose 5 percent. Information technology shares advanced 4.8 percent to their highest level in two-and-a-half years.
“In the medium and long term, it will force the reorganization of the supply chain, increase the demand for domestic advanced process production capacity, and promote technological breakthroughs in upstream semiconductor equipment and materials,” Chinese brokerage Cinda Securities Co (信達證券) said in a note on Sunday.
Investors have bet that the re-election of Donald Trump as US president could actually benefit strategic sectors in China by drawing state backing and say China is much better prepared for trade tensions than in 2016.
In Taipei trading, TSMC recovered most of its early losses thanks to its sound fundamentals, closing 0.46 percent lower at NT$1,085 after hitting NT$1,070.
TSMC shares were under pressure following Reuters’ report, Cathay Futures Consultant Co (國泰證期顧問) analyst Tsai Ming-han (蔡明翰) said.
“TSMC remains fundamentally healthy, so the earlier losses provided a good opportunity for bargain hunters to buy,” Tsai said, referring to the company’s record high sales of NT$314.24 billion last month, up 29.2 percent from a year earlier.
“To my knowledge, TSMC stopped selling chips made on the 7-nanometer process to China before the report surfaced. The report only had a short-lived impact on TSMC’s share price today,” Tsai said.
Additional reporting by CNA and staff writer
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