The stock market growth of Chinese chip companies is threatened by strained relations with the United States, which could hinder the growth of the industry. In this respect informs Bloomberg agency.
The publication noted that the FactSet indicator, which tracks chip-related national companies, dropped more than 5% on Friday, bringing annual gains to 15%. At the same time, this sector was under threat as relations between China and the United States became more complex. As US President Joe Biden is about to sign an executive order limiting investment in China’s key high-tech sectors, investors want to see if Beijing can turn the tide.
Market experts felt that Chinese chip manufacturers should create their own ecosystems by investing in the development of the industry. In addition, Chinese authorities began to encourage local manufacturers to invest in increasing their chip production capacity.
Analysts think there is no new support measure despite the sharp rise in Chinese shares. Also, investors understand that most local firms will not be able to produce advanced chips, and therefore investments in such sectors may become unprofitable. Therefore, China has a lot of work to do to close the technology gap, especially in the face of limited access to global suppliers of semiconductor equipment.
Bloomberg at the end of January knowledgeableMicrochip manufacturers are facing overstock due to falling demand following a surge in sales during the coronavirus pandemic. It was noted that the situation also destabilized the position of suppliers and harmed the economies of Asian countries based on technology exports.