Ng indicated that research and development in the industry would involve “a complicated and lengthy process, but it is important to counter US restrictions”.
In the first 11 months of this year, 46 semiconductor-related companies involved in design, fabrication, components and materials went public on the Star Market, compared with 19 firms in the same period a year ago, according to Chinese corporate data service Qichacha.
More capital is also being raised by Chinese fund management firms, which have launched various semiconductor-related funds to funnel the money of retail investors into chip stocks.
ICBC Credit Suisse Asset Management – a joint venture between the state-owned Industrial and Commercial Bank of China, the world’s largest commercial lender by assets, and 166-year-old Swiss investment bank Credit Suisse – last week launched a new fund that is benchmarked on the mainland’s chip stock index.
All these inflows of fresh investment reflect an opportunity for China’s semiconductor industry to cope with the latest US trade restrictions and Washington’s increased scrutiny of firms that form part of the country’s chip supply chain.
In addition, 31 Chinese tech firms, research institutions and related entities were added by Washington to the US Unverified List. Parties whose bona fides have not been substantiated by the BIS are put on this list, which serves as a trade restriction since those on it are ineligible to receive items subject to the US government’s Export Administration Regulations.
“Since the US chip ban, China’s onshore secondary capital market for semiconductor firms has been driven by ‘patriotism’ and potential government support … instead of the short-term cyclical tech cycle,” Natixis economist Ng said. He cited as example the shares of dual-listed SMIC, which fell 0.9 per cent in Hong Kong yet gained 8 per cent in Shanghai since early October.
The Star Market’s chip index, which includes the country’s top 50 semiconductor companies, was down 27 per cent year-to-date as of November 24, according to data from the state-run China Securities Index.
Owing to US trade restrictions, China’s latest batch of semiconductor firms going public are mostly involved in mature IC technologies.
Shanghai-based New Vision Microelectronics, for example, builds display chips and sensors using the 110-nanometre manufacturing process. The products of Shenzhen-based flash memory chip designer XTX Technology are made on the 65nm and 55nm process nodes.
Many of these chip firms up for listing are also focused on the domestic market. Shanghai Southchip Semiconductor Technology Co, whose founding members came from US IC manufacturer Texas Instruments, has Xiaomi Corp and personal computer giant Lenovo Group as clients.
