Advertisement
Semiconductors
Tech

Chinese importers buying up computing chips before US sanctions shut Hong Kong route

  • Re-exports of semiconductors through Hong Kong to the mainland jumped by 11 per cent in the first half of the year from the same period in 2019
  • The Hong Kong trade represents more than 38 per cent of China’s total chip imports on average

Reading Time:2 minutes
Why you can trust SCMP
0
Huawei has sought to reassure customers that its chip supply remains intact despite growing US restrictions. Photo: Reuters
Bloomberg
Chinese importers of computing chips are ramping up their purchases of equipment through Hong Kong, in the expectation that US sanctions on the territory will soon make the trade much harder.

Re-exports of semiconductors through Hong Kong to the mainland jumped by 11 per cent in the first half of the year from the same period in 2019, almost double the increase in total chip purchases, according to Bloomberg calculations using official data. Re-exports rose by 21 per cent in June alone. The Hong Kong trade represents more than 38 per cent of China’s total chip imports on average.

In the wake of Beijing’s imposition of a national security law on the Asian financial hub, the US government has revoked the special trading status that eased commerce in sensitive goods including some computer chips. For buyers like Huawei Technologies, Xiaomi or Lenovo Group, a worst-case scenario would entail severe supply bottlenecks.

“Chinese customers are willing to buy more before the actual effective day of the sanction,” according to Victor Choi, chairman of Hong Kong Electronics & Technologies Association, who estimates there are 300 or so firms which specialise in the trade. “They are placing more orders for those items than before.”

Huawei has sought to reassure customers that its chip supply remains intact despite growing US restrictions. China’s largest tech company has stockpiled enough inventory to tide them over short-term disruptions, even as it rapidly accelerates in-house development of alternatives to American silicon. But Washington’s sanctions mean that cache may eventually run out.

Advertisement