China's Semiconductor Stocks 'Stir' as It Targets US Micron

As China formalized sanctions against the U.S. memory semiconductor company Micron, the stock prices of Chinese semiconductor companies rose together. This is analyzed as a result of growing expectations that the authorities' directive to stop purchasing Micron's products could be a windfall for Chinese semiconductor companies.

On the 22nd, Gigadevice Semiconductor, listed on the mainland Chinese stock market, recorded 117.62 yuan at one point during the session, rising 5% compared to the previous trading day. However, it turned to a downward trend after 3 p.m., recording 112.54 yuan as of 3:11 p.m. Ingenic Semiconductor recorded 91.19 yuan at the same time, up 2.61% from the previous trading day, and Kaifa Technology was trading at 20.14 yuan, up 1.31% from the previous trading day.

[Image source=Reuters Yonhap News]

SMIC, China's largest foundry (semiconductor contract manufacturing) company listed on the Hong Kong stock market, recorded 171.64 at one point during the session, with its stock price rising 4.32% compared to the previous trading day. As of 3:11 p.m., it recorded 164.19. The stock price of Hua Hong Semiconductor, China's second-largest foundry company, was trading at 27.20 Hong Kong dollars at the same time, up 0.74% from the previous trading day.

China's order to stop purchasing Micron products due to security concerns became a positive factor. The Cyberspace Administration of China (CAC), under the National Internet Information Office, stated the day before that Micron's products failed the internet security review due to serious security issues and instructed operators of critical information infrastructure not to purchase products from the company.

Industry insiders view China's move as part of retaliation against U.S. sanctions on China. Previously, the U.S. announced sanctions at the end of last year banning the export of advanced semiconductor equipment to Chinese semiconductor manufacturers. In response, the U.S. Department of Commerce issued a statement on the 21st, saying it "firmly opposes the restrictions that are virtually baseless," immediately opposing China's measures.

The U.S. Department of Commerce said, "Along with recent attacks on other U.S. companies, this measure contradicts China's claim that it is committed to opening markets and creating a transparent regulatory framework," and stated it will cooperate with allies to address China's semiconductor market distortion issues.

There are also forecasts that China's sanctions on Micron product purchases will lead to benefits for Korean companies in the long term. Major foreign media reported, "Chinese memory semiconductor companies have weaker technological competitiveness," and that in the long run, China will increasingly depend on overseas companies such as Samsung and SK Hynix.