Chips Are Back. But Not Equally or for Everyone

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over a period of six months; The global semiconductor industry has been among the most battered and battered sectors as one of the hottest sectors. economic downturn China’s ongoing Covid restrictions; Escalating tensions across the Taiwan Strait and tougher regulations from Washington have wiped nearly $2 trillion off the value of listed chipmakers.

Now they are back. In the past month, a remarkable turnaround has added $600 billion to the value of these companies. The rebound was not evenly distributed, with some geographies and product sectors performing better than others.

A Bloomberg Opinion analysis of more than 220 global chip companies with a market value of at least $1 billion found that investors shrugged off concerns about the U.S. government’s tougher rules on technology transfers to China. At the same time, Semiconductor players in the world’s second-largest economy are faring worse despite recent moves to ease Covid Zero and boost the local economy.

Earlier last month, the Biden administration announced that the machinery used by Chinese chipmakers to produce components at 14-nanometers or better; It has been announced that software and support will be discontinued. Most capabilities are currently at 28-nanometers and above, but the new rules aim to ensure Beijing fails to catch up with the US and its allies. Lam Research Corp. Shares of equipment and services providers such as China fell on fears that China would suddenly go out of bounds.

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Nvidia Corp. and Advanced Micro Devices Inc. Chip designers such as China are also convinced that Chinese customers will no longer be allowed to buy the advanced components used to run artificial intelligence and high-performance computing systems. Similarly, These moves are aimed at boosting China’s domestic chipmakers, as the industry benefits from government support aimed at transferring the balance from foreign companies.

Investors now see things differently. Last month, The average return of the global semiconductor sector jumped 21%. The sector is down 30% for the year, with only two names among mid- and large-cap companies (GlobalFoundries Inc. and Semiconductor Corp.) looking to grow.

Nvidia and AMD led the gains, along with Dutch device maker ASML Holding NV. Indeed, It’s the big players with market capitalizations above $100 billion — up 23.5% on average — that are the main beneficiaries of this turnaround. This could be a sign that investors are ready to get back in but want to stick with blue-chip names: Taiwan Semiconductor Manufacturing Co . added nearly $70 billion to its market value last month. Smaller companies with between $1 billion and $10 billion are lagging behind.

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Note that Samsung Electronics Co. is excluded from our analysis because it is a major chipmaker, but less than a third of its revenue comes from semiconductors.

The biggest sign that investors don’t care about tighter regulations on sales to China is the fact that seven of the top 10 performers are suppliers of equipment or related services. TSMC Intel Corp. and SK Hynix Inc. Major names including TSMC, Intel Corp. and SK Hynix Inc. These companies stand to suffer the biggest losses after cutting their spending budgets for this year, citing supply shortages and a worsening economic outlook. But rather than canceling the orders, Chipmakers are likely to push their purchases into next year in anticipation of long-term growth.

Although much smaller than Taiwanese and American chipmakers on average. Chinese listed companies have yet to transform the country into a supply chain stake, but have made it a major player in global capital markets.

The big boost is a big part of Chinese leader Xi Jinping’s plan to boost the region’s sector, complete with preferential treatment and government spending. That should be positive for the industry. But investors don’t believe it will do much, even as the U.S. tries harder to cut back the world’s most populous nation. With the exception of South Korea, which is heavily dependent on the disappointing memory-chip industry, Chinese semiconductor companies are the U.S. It has lagged behind its Japanese and Taiwanese counterparts.

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Chipmakers’ sharp decline to mid-year is a warning to investors and the industry not to take the sector lightly. But the dust settled, As tensions cool and world leaders gather again, the same reasons for loving chips are resurfacing. Until the next crisis.

More from this author and others from Bloomberg Opinion

• These strict Chinese chips rules are very timely: Tim Culpan

• The auto industry is the economy’s best hope right now: Conor Sen

• Apple’s US Chip Move Has A Lot of Marketing Like Tech-Tim Culpan.

This column does not necessarily reflect the opinion of the editorial team or Bloomberg LP and its owners.

Tim Culpan is a Bloomberg columnist covering technology in Asia. He was previously a technology reporter for Bloomberg News.

More stories like this are available at bloomberg.com/opinion.

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