U.S. Export Curbs Sink China Tech Share Values

Shares in Chinese tech giants Alibaba Group and Tencent as well as in chipmakers slumped on Monday, Oct. 10, 2022, as investors were spooked by new US export control measures aimed at slowing Beijing's technological and military advances, Josh Horwitz and Jason Xue reported for Reuters.

Photo Insert: Taiwan said it will abide by new US rules on chip exports to China. The most immediate impact is likely to be felt by Chinese chipmakers, they said.

The Biden administration published a sweeping set of export controls on Friday, including a measure to cut China off from certain semiconductor chips made anywhere in the world with US equipment.

The measures could amount to the biggest shift in US policy toward shipping technology to China since the 1990s.

Experts expect the rules will have a broad impact, slowing China's efforts to develop its own chip industry and advance commercial and state research involving weapons, artificial intelligence (AI), data centers, and many areas powered by supercomputers and high-end chips.

Taiwan said it will abide by new US rules on chip exports to China. The most immediate impact is likely to be felt by Chinese chipmakers, they said.

Under the new regulations, US firms must cease supplying Chinese chipmakers with equipment that can produce advanced chips - logic chips under 16 nanometers (nm), DRAM chips below 18 nm, and NAND chips with 28 layers or more - unless they first obtain a license.

That's set to affect China's top contract chipmakers - Semiconductor Manufacturing International Corp. (SMIC) and Hua Hong Semiconductor Ltd. - as well as state-backed leading memory chipmakers Yangtze Memory Technologies Co. Ltd. (YMTC) and Changxin Memory Technologies (CXMT).

"The US restrictions could make development of China's advanced chip technologies even more challenging," Citi analysts said in a note.

A steep decline in tech shares led China's market down on its first post-Golden Week holiday trading on Monday.

An index measuring China's semiconductor firms tumbled nearly 6%, and Shanghai's tech-focused board STAR Market declined 3.6%. SMIC dropped 3.8%, chip equipment maker NAURA Technology Group Co. sank 10% by the daily limit, and Hua Hong Semiconductor plunged 9.5%.

Shares in AI research firm Sensetime and surveillance equipment maker Dahua Technology, which will be cut off from chips made using US technologies, tumbled 4.4% and 10%, respectively.

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