Financial Services Association, December 4 (Editor: Feng Yi) With the recent renewal of the US semiconductor export control policy, domestic semiconductor companies listed in Hong Kong are once again active.

Today, Hong Kong semiconductor chip stocks are more popular than the market. As of press release, Horizon Robot-W (09660.HK) has risen nearly 3%, Jingmen Semiconductor (02878.HK) has risen more than 2%, and SMIC (00981.HK) and CLP Huada Technology (00085.HK) have followed suit.

On December 3, the China Semiconductor Industry Association, the China Association of Automobile Manufacturers, the China Internet Association, and the China Communications Enterprise Association issued a collective statement expressing firm opposition to the export restrictions imposed by the United States to China.

It is worth mentioning that compared to the continuous opposition in previous rounds of “core restriction orders,” the domestic industrial chain has begun to actively send countersignals.

While expressing opposition, the Four Associations also recommended that relevant companies carefully purchase US chips, expand cooperation with chip companies in other countries and regions, actively use chips manufactured by domestic and foreign companies in China, and call on the Chinese government to support the steady development of reliable semiconductor product suppliers.

The Ping An Securities semiconductor team pointed out in the December 3 report that the US will increase semiconductor export controls to China, which will force autonomous and controllable acceleration.

Ping An Securities believes that under the guidance of national policies and financial support, the ability of domestic enterprises to innovate independently will be further enhanced. In the long run, the demand for localization of core technologies such as semiconductors has been highlighted. Domestic industrial chain enterprises are more willing to increase the localization rate, giving domestic semiconductor companies more opportunities.

According to data from industry agencies SIA and TechInsights, in 2023, mainland China will account for about 30% of the global semiconductor market demand, accounting for about 7% of the global output value, corresponding to a self-sufficiency rate of about 23%. Of these, 12% are local Chinese companies (narrow self-sufficiency ratio), and 11% are manufactured by foreign companies in mainland China. It is easy to see from this that there is huge room for improvement in the subsequent localization of semiconductor chips.

On the other hand, the latest report released by CITIC Securities also stated that domestic chips can to a certain extent avoid the security backdoor hazards that foreign chips may have. In the Internet field involving the country's critical information infrastructure, such as network systems in the financial and energy industries, the use of secure, autonomous and controllable domestic chips can guarantee the confidentiality, integrity, and usability of data.

Dongwu Securities analyst Lu Zhe's December 4 report also shows that in the context of supporting the localization superposition policy, in terms of sales, China's chip sales have risen step-wise in the past 10 years, and the replacement environment for high-end core chips is becoming more and more mature.

Overall, since coming to power, the Biden administration has used the “High Wall of the Courtyard” as its international economic strategy, and the impact of subsequent overseas restrictions is likely to continue to put pressure on them.

Considering the leading role of the four major industry associations in their respective industries, the semiconductor industry may also usher in more policy follow-up in the future, which is worth keeping track of by investors.