Beijing’s Micron probe propels rally in Chinese chip makers as US tech rivalry deepens

The CNI Chip Index, which tracks semiconductor-related stocks in Shanghai and Shenzhen, rose 5.2 per cent on Monday

Micron probe will open up new opportunities for China’s memory-chip industry, Essence Securities analyst Ma Liang says

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Analysts expect China to boost support for domestic chip makers as the tech war with the US and its allies shows no signs of thawing. Photo: Reuters

Published: 3:02pm, 3 Apr 2023Updated: 6:32pm, 3 Apr 2023

Chinese chip stocks surged after Beijing launched an investigation into US chip maker Micron, as investors bet the country’s bid for self reliance in the sector could boost the nation’s semiconductor firms.

The CNI Chip Index tracking semiconductor-related companies in Shanghai and Shenzhen jumped 5.2 per cent on Monday, the biggest gain since November. The gauge, compiled by a unit of Shenzhen Stock Exchange, tracks the 25 largest stocks in the sector including China’s largest chip maker Semiconductor Manufacturing International Corporation (SMIC), Giga Device and chip-equipment maker Naura Technology.

Central processing unit maker Ingenic Semiconductors jumped 12.7 per cent to 100.30 yuan in Shenzhen and Advanced Micro-Fabrication Equipment surged 11.1 per cent to 163.90 yuan in Shanghai. In Hong Kong, China’s biggest chip maker Semiconductor Manufacturing International Corporation (SMIC) advanced 7.5 per cent to HK$20 while peer Hua Hong Semiconductors rose 5.8 per cent to HK$36.75.

“The investigation into Micron opens up new opportunities for the domestic memory-chip industry,” Essence Securities analyst Ma Liang said in a research note on Sunday. Together with Japan’s export ban, the probe will be a catalyst for China to speed up the development of domestic alternatives, benefiting both chip manufacturers and chip-equipment makers, Ma said.

China’s internet watchdog has opened an investigation into US chip giant Micron. Photo: Reuters

China hit back at American chip firms for the first time on Friday, with the country’s top internet watchdog launching a cybersecurity review into Micron to “safeguard key information infrastructure supply chain security”. The US memory-chip giant said it was “cooperating fully” with the regulator, but analysts said it could be subject to “restrictive measures” if its products were found to have violated cyber securities.

The US company is now facing “the threat of increasing competition” as a result of significant investment in the semiconductor industry by the Chinese government and various state-owned or affiliated entities such as Yangtze Memory Technologies and ChangXin Memory Technologies, it said in its earnings result on March 29. In addition, the Chinese government may restrict the company from taking part in the China market or may prevent it from competing effectively with Chinese companies, Micron said.

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