Written by Eduardo Baptista and Heikung Yang
BEIJING/SEOUL (Reuters) – Chinese chip companies targeted by Washington with new export controls have pledged to accelerate the localization of their supply chain and said they will be able to continue production thanks to recent efforts to build stockpiles of equipment.
The latest restrictions, the third US crackdown on the Chinese sector in three years, focused on chipmaking equipment, software and high-bandwidth memory. It restricts exports to 140 companies, including chip equipment maker Naura Technology Group and ACM Research.
Empyrean, a maker of electronic design automation (EDA) tools also known as Beijing Huada Jiutian Technology, said its inclusion on the list would have little impact on operations.
“The company will seize the development opportunity to accelerate the localization of full-process EDA tools,” it said in a statement to the stock market.
Jiangsu Nata Opto-Electronic Material, which makes the materials used to make chips, told Chinese news outlet Yicai that it had stocked them and would also make replacements locally, but did not provide details.
Other companies, such as semiconductor testing systems provider Beijing Huafeng Test & Control Technology, said they had already localized their entire supply chain, the 21st Century Business Herald reported.
While Chinese authorities described the move as “economic coercion,” the measures appeared to have had little impact on chipmaker stocks, which rose slightly on Tuesday as analysts said the restrictions were less stringent than feared.
Controllable disorder
Martin Rasser, managing director at Datena, a data intelligence platform focused on Chinese technology, said the US restrictions target the “weakest point” of China’s semiconductor industry, which relies heavily on foreign equipment for manufacturing.
Chinese chip industry capital spending next year is likely to fall by $10 billion, or about 30% year over year, to $35 billion, as a result of these restrictions, Jefferies analysts said in a note.
But other analysts said the restrictions may not have the desired effect, as Chinese chip companies have since last year ramped up purchases of foreign-made equipment from the likes of Dutch lithography machinery maker ASML and US tool maker Lam Research.
In the first nine months of this year, China’s imports of semiconductor equipment increased by a third to $24.12 billion, according to Chinese customs data.
“This was as close to a continuation of the status quo in that it makes things very difficult for leading manufacturers, but it will not stall that progress any more than current regulations,” said Jeff Koch, an analyst at Bank. Semi-analytical research group.
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