Chipmaker China Semiconductor Manufacturing International Corp led a $13 billion sector meeting, when investors bet Beijing would announce political or financial support for the company’s core for its geopolitical ambitions.
Shares of SMIC, which has been blacklisted by Washington for allegedly aiding the Chinese military, surged as much as 28% on Monday to the highest level in four years. That brings its value since Thursday to almost 65%, or about $ 10.7 billion in market value at the peak.
Smaller competitors Hua Hong Semiconductor Ltd and Shanghai Fudan Microelectronics Group Co managed to make a combined profit of more than $2 billion during the period. The sector’s recovery reflects a general market recovery since late September, when promises of policy support helped boost confidence in the world’s second-largest economy.
Many investors expect Beijing, which is trying to revive real estate and banking, to go to semiconductors. Microchips, the cornerstone of technologies ranging from AI to electric cars, are at the center of a long-running dispute with the United States for geopolitical supremacy.
Investors are looking to other policy options after China’s leaders signaled their intention to reverse the country’s slow growth. Before the one-week holiday, the government announced a series of stimulus measures, from interest rate cuts to a $340 billion investment pledge to support the stock market. China’s chief economic planner is expected to brief the public on Tuesday on a package of measures to boost economic growth. For the past week, Hong Kong-listed stocks have been the only trading channel for Chinese chip companies, with the domestic market closed until Tuesday. Representatives for SMIC did not respond to requests for comment outside normal business hours. China, which lags behind its Western competitors in the production of microchips, is investing heavily in the sector.
China is on track to spend more than $142 billion, according to estimates from the Semiconductor Industry Association of Washington, by mid-2024. As part of the effort, the government raised $27 billion for the so-called “Big Fund” to look at state investment in several companies, including the champions of the regional electronic chip manufacturing SMIC and Huawei Technologies Co.
Beijing and local governments generally do not disclose semiconductor revenue, although some companies do disclose some of the subsidies they receive.
Plans vary widely because the funding comes from state funding, local government funding and a mix of incentives and tax breaks.
