Investing.com– Chinese chipmaking stocks rose on Wednesday after the government warned against reliance on U.S. chips and encouraged businesses to buy locally in light of new U.S. export restrictions against the country.
Semiconductor Manufacturing International Corp (HK:0981)- the country’s biggest chipmaker by volume- rose 2.7% in Hong Kong trade, while peers Hua Hong Semiconductor Ltd (HK:1347) and Shanghai Fudan Microelectronics Group Co Ltd (HK:1385) added around 1% each.
Chinese industry associations warned that U.S. chips were “no longer safe” and encouraged companies to buy locally instead, as Beijing responded to new export curbs from Washington, media reports showed.
This boosted local chipmaking stocks with the prospect of increased demand from within the country. Majors such as SMIC and Huawei already make chips that compete with offerings from U.S. majors such as NVIDIA Corporation (NASDAQ:NVDA) in China.
Wednesday’s warning came after Washington imposed its third major crackdown in three years on China’s chipmaking industry this week, cutting off more companies from access to key chipmaking equipment.
China had retaliated by blocking exports of key minerals and metals to the U.S., in what appears to be a rapidly escalating trade war. The situation could be worsened by President-elect Donald Trump imposing more trade tariffs against Beijing when he takes office in January.
Washington has moved to rapidly block off China’s access to the artificial intelligence industry, citing concerns over national security. But the move has drawn ire from Beijing, souring relations between the world’s biggest economies.