Key Highlights from Last Trading Session (9/20) :
1. China’s largest bank by assets, the Industrial and Commercial Bank of China (ICBC), is setting up a program to support the development of the country’s advanced manufacturing industry, particularly chip manufacturing.
The bank, in collaboration with the Ministry of Industry and Information Technology (MIIT), will provide RMB 300 billion ($41 billion) in targeted financing to the industry in the next 3 years. This is on top of a new RMB 300 billion fund the government is creating to invest in companies in the same industry to promote the advancement of China’s independence from Western chipmaking technology. Beijing is going all out in support of its chip industry and domestic companies are going to be riding this wave for the foreseeable future. $SENSETIME-W (00020.HK)$ $HUA HONG SEMI (01347.HK)$
2. Tencent and Alibaba have both invested in Zhipu AI, an AI foundation model firm, through a Series B-4 funding round.
The two Chinese tech giants will join Meituan, which invested in Zhipu AI back in July. This latest round boosts the AI firm's valuation to $1 billion. The AI assistant has capabilities like general question answering, long-form dialogues, creative writing, and code generation. The significance of this news is how China's tech firms are now able to freely invest in startups, particularly in the crucial artificial intelligence sector of tech. After years of clamping down on tech, Beijing appears to realize the benefit of private sector playing a bigger role in growing tomorrow's champions. $BABA-W (09988.HK)$ $Alibaba (BABA.US)$ $TENCENT (00700.HK)$ $Tencent (TCEHY.US)$ $MEITUAN-W (03690.HK)$ $Meituan(ADR) (MPNGF.US)$
3. Germany is seeking to remove Huawei and ZTE technology from their 5G network.
Germany's interior ministry wants to demand the country's telecom operators reduce or eliminate the use of components provided by China's two largest telecom equipment providers, Huawei and ZTE by 2026. This is despite the two companies already having proven to have enabled China to build out the world's most advanced and widespread 5G network that now enables a host of new applications for the new economy.
4. Yangtze Memory Technology Corp (YMTC) is seeking to remove US parts and technology from its manufacturing equipment.
The company, China's largest memory chip manufacturer, currently buys components from US-based Lam Research for the manufacture and upkeep of chipmaking equipment. YMTC will be actively looking at domestic companies to replace what they can of Lam Research's technology that they require. However, it's easier said than done given the lead that Lam Research has in the field of semiconductor equipment manufacturing. YMTC is already on the US export blacklist after being added last December. That means any export of US technology to YMTC needs to get US government approval first. So, this latest news doesn't come as a surprise.
5. China's making good on its promise to restrict the export of key metals used in the semiconductor industry.
Data shows that China's exports of gallium and germanium vanished in August after Beijing's announcement that it would restrict exports based on national security grounds. Exports of germanium in July amounted to 8.63 metric tons, while that of gallium amounted to 5.15 metric tons. Both metals are by-products of other manufacturing processes and China has a hammerlock on global supplies. The disappearance of exports may just be temporary as domestic producers try to obtain licenses first.
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