Email of the day on China's domestic semiconductor industry
Comment of the Day

October 08 2018

Commentary by Eoin Treacy

Email of the day on China's domestic semiconductor industry

Picking up on today’s big picture commentary, as well several recent comments about China’s mission to create a semiconductor sector, I attempted to identify the largest Chinese based semiconductor manufacturers and assess whether they might benefit from such an initiative. I noted that SMIC (Semiconductor Manufacturing International Corporation) based in Shanghai is listed in HK ((981:HK) and the US (SMI:US).   Do you feel that Chinese semiconductor manufacturers, such as SMIC, might stand to benefit from further state investment in the local sector to enable more independent control over their supply chain of semiconductors? The SMIC Chart at this stage would certainly not support this hypothesis as it has underperformed the SOX Index, but seems to be quite oversold.  Your insight into this topical issue would be much appreciated.

By the way, for whatever reason, code 981:HK is shown in the Chart Library as China Green Holdings Limited (actual stock code 904:HK) and not SMIC! 

Thank you for the excellent service - I look forward to starting virtually every day here in Sydney with your valuable and insightful video commentaries. 

Eoin Treacy's view

Thank you for this email and I am delighted you are enjoying the daily video commentaries. I've also amended the ticker for SMIC.

China has demonstrated time and again that it has no interest in importing chips that could offer a backdoor for foreign governments into its IT networks. At the same time, it has pioneered a major offensive to insert its own devices into the bones of the global IT infrastructure so it can do its own listening. Both of those objectives mean having a domestic chip manufacturing industry is essential to Chinese government policy.

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