The chip wars are heating up. This Chinese stock rose 30% in five days
China is starting to flex its clout in the semiconductor supply chain, and the stock market is only just beginning to react. The share price of Xinyuan Germanium in Lincang, Yunnan has risen by more than 30% in the past five trading days. About a week ago, on July 3, China’s Ministry of Commerce announced that export restrictions on germanium and gallium would take effect on August 1. The two metals, which are produced in China, account for the bulk of the global supply and are used to make chips, fiber optics or solar panels. Much of it goes overseas. According to the US Geological Survey, between 2018 and 2021, more than half of the metals imported by the US came from China. On the Shenzhen Stock Exchange, the share price of Yunnan Germanium hit the daily limit of 10% for three consecutive days. That came despite the company warning on a third day of losses for the first half of the year. Once investors realize this, or new export rules come into play, it’s a signal of growth potential for some of China’s chip industry. Managing director Du Bo said early-stage investment firm Huafon Capital Management is looking for material opportunities upstream in the semiconductor supply chain. “In China, companies make more money by investing in supply chains rather than artificial intelligence,” Du said in Mandarin (translated by CNBC). He noted that the supply of the high-end chips needed to train AI models is more sensitive to U.S. restrictions, while there is a larger market for less advanced chips in everyday products. For such “mature” chips, Du expects China to be able to build its own production equipment and materials in about two to three years. WestSummit claims to manage about 20 billion yuan ($2.77 billion) in assets. Valuations for chip-related deals in China’s primary market have declined recently, and the company hopes to ramp up investment in the sector by the end of the third quarter, Du said. China’s latest export curbs follow on the heels of sweeping U.S. export restrictions in October to limit Chinese companies’ access to advanced semiconductor technology. Ye Gelai, co-founder and managing partner of Delta Capital, which has assets of about 7 billion yuan, said that with the exception of a few companies, “the business of most semiconductor companies, whether in China or the United States, has not been really affected.” Managed. “The real impact is indeed on the psychology of some investors,” Ye said in an interview last month. “It scared off some investors. Many of them went back to the industry.” Shanghai New Vision Microelectronics, one of Delta’s investments, raised more than 10 million yuan in its June 1 IPO on the Shanghai Science and Technology Innovation Board. billion yuan. The company, which makes chips for display screens, is up about 55% from its IPO price. Will there be more export controls in the future? The political environment suggests that China may curb its chip capabilities. Wei Jianguo, a former vice minister of commerce, told state media in a report on Wednesday that the latest export controls were just the beginning. Wei did not respond to CNBC’s request for further comment. “Many China hawks in Washington view Beijing’s gallium and germanium export curbs as an aggressive move requiring stricter technology export restrictions on chips, chip-making equipment, chip designs, and a renewed call for an exit from manufacturing. Not without reason,” said Stansberry Research analyst Brian Tycangco. That could prompt Beijing to impose more restrictions, he said. “So I don’t think the surge in rare earths is over yet,” Taikanko said. “There are still things brewing under the surface.” He said prominent names in the industry trading outside mainland China included Lynas Rare Earths , MP Materials and China Rare Earth Holdings.
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