Shares in several Chinese companies linked to the semiconductor industry experienced significant gains on Wednesday, driven by investor enthusiasm following the release of a government list that signals potential advancements in China’s domestic chipmaking capabilities.
Notable Stock Performances
Shanghai Zhangjiang Hi-Tech Park Development and Shanghai Highly Group both reached their daily limit with 10% gains by market close, while Sanhe Tongfei Refrigeration surged to its 20% limit. Additionally, Shenyang Blue Silver Industry Automation Equipment finished the day up 10.7%.
Government Support for Domestic Technology
The stock surge follows a guide released on September 9 by China’s Ministry of Industry and Information Technology (MIIT), which promotes the use of major domestic technical equipment. The guide specifically highlighted two lithography machine models and recommended their use by state-linked organizations.
Challenges in Semiconductor Development
Chipmaking tools are critical to China’s strategy to enhance its semiconductor industry, which has faced significant obstacles due to U.S. and allied restrictions on the export of advanced equipment. Notably, ASML, a Dutch firm and a key manufacturer of advanced lithography machines, has been prohibited from selling its most sophisticated equipment to China.
Chinese companies, including Shanghai Micro Electronics Equipment (SMEE), have been working to develop their own lithography capabilities, but industry experts indicate that progress has been slow, highlighting the technological hurdles that remain.
Resolution Standards and Market Comparisons
The more advanced of the two lithography machines mentioned in the MIIT guide has a resolution of 65 nanometers or better, a specification that significantly lags behind international competitors. For context, ASML’s leading lithography machines achieve resolutions of 8 nanometers and below. Leslie Wu, CEO of consulting firm RHCC, noted that the 65-nanometer machine is at least 15 years behind global standards.
Conclusion
While the recent government support has sparked excitement among investors, the Chinese semiconductor industry still faces considerable challenges in achieving technological parity with international competitors. As efforts continue to bolster domestic capabilities, the industry’s future will depend on overcoming these significant obstacles.
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