US’s Huawei Ban for Could Be a Boon for Chinese Chip Suppliers

Huawei

While US’s blacklisting of Huawei has taken a toll on U.S. semiconductor shares, investors in Chinese firms are betting they can gain from China’s new efforts to build a homegrown supply chain.

The trade faceoff has pushed up share prices of little-known firms such as Shenzhen Fastprint Circuit Tech and Jiangsu Changjiang Electronics Technology. The effect could be a short term gain analysts say, but it is possible that the challenges faced by Huawei’s today, could become the bedrock of   a long-term campaign in China to replace imported technologies with home grown cheaper and competitive ones. Taking advantage of the situation, Chinese industry as decided to take this ban as  warning bells for the country to start becoming self-reliant and self-sustainable for technology products, especially in the chip industry.

Read More: U.S. Blacklists China’s Huawei As Trade Dispute Deepens

China has another initiative on the way, seen as part of President Xi Jinping’s efforts to counter U.S. curbs on Chinese technology advancements – Shanghai’s Nasdaq-style Technology Board, to be launched next month.

As the U.S. put Huawei on the U.S. “Entity List”, banning U.S. companies from doing business with the Chinese firm, there was widespread fall in supplies from Qualcomm Inc and Broadcom Inc., but this too has seen an unexpected repercussion. China’s semiconductor sector has gained nearly 5% so far this week, bolstered by a burst of patriotic buying. The sector has far outperformed the broad index, which is down 1.7%.

Read Also: Huawei Gets Mexico Against US Support

But what  China needs is to gain on the core technologies needed for it to be able to create a self-reliant domestic semiconductor industry. Also, U.S. ban on Huawei has disrupted the global supply chain, with a huge number of potential opportunities for China to re-establish industry order. The crucial aspect of this new opportunity is whether China’s enterprise will be able to capitalise on this foot in the door.

A large portion of critical components manufactures in China are unlisted, though large enough. Yangtze Memory Technologies Co Ltd, Fujian Jinhua Integrated Circuit Co Ltd, and Innotron Memory, for example, are commonly considered as China’s largest and most advanced makers of memory, but not listed companies.

In the face of US restrictions, Shanghai’s Technology Innovation board will help companies tap China’s huge capital markets, enabling funding for expensive research for proprietary technologies. Till date, more than 100 tech start-ups have applied to list on the board, aiming to raise over $14 billion. These include chipmakers and robotic companies.

Read More: Huawei Equipment Had Security Flaws in 2011-2012

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