China’s biggest chipmaker Semiconductor Manufacturing International Corporation (SMIC) has gained more than $12 billion in market value in two trading sessions amid investor euphoria on expectations of another stimulus from Beijing.
Investors were also likely betting on a boost in revenues for the Chinese chip industry, following an advisory from Beijing to local firms to ditch chips supplied by Nvidia for those produced by local firms.
Hong Kong-listed shares of SMIC closed with gains of nearly 22% on Monday. That was after the chipmaker’s shares jumped nearly 29% on Friday.
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Effectively, SMIC shares were up by 60% in two sessions, gaining 93.65 billion HKD ($12.06 billion) in market value in the two trading sessions, according to the Wall Street Journal calculations.
Chinese stocks are riding a broader rally brought on by a stimulus package from Beijing towards the end of September that pumped up beaten-down stocks across the mainland to their best levels since April 2023.
China’s blue-chip CSI300 Index has soared 25% over five sessions, its strongest gain for such a period on record.
The Hang Seng index is also up by more than 20% since the stimulus, reaching its best levels since February 2022.
The stimulus-backed rally has reverberated through Chinese semiconductor stocks, with chip firms across the spectrum seeing strong gains.
Hong Kong-listed shares of Hua Hong Semiconductor, China’s second-largest chip foundry, closed with gains of more 16%. Similarly shares of Shanghai Fudan Microelectronics Company jumped nearly 21%.
Global X China Semiconductor exchange-traded fund jumped more than 27%, taking gains for the year to over 57%.
Stocks in Shanghai, however, have been closed since last week for National Day holidays. Kenny Ng, strategist at China Everbright Securities International in Hong Kong told Reuters he expects stocks on the mainland to rally 7%-10% when they reopen on Tuesday.
Investors and analysts are betting on more stimulus announcements tomorrow from China’s top economic planner as the mainland opens after week-long holidays.
Officials will brief reporters on “systematically implementing a package of incremental policies to solidly promote economic growth, structural optimisation and sustained momentum of development,” according to a statement from China’s State Council.
Chip war boost
The chip rally comes as a shot in the arm for China’s semiconductor industry, with shares of top chipmakers left beaten down by wide-ranging chip export curbs imposed by the United States and its allies.
To counter those curbs Beijing is doling out billions in state subsidies for top chipmakers like SMIC. In May, China has set up a third state-backed investment fund worth $47.5 billion for the semiconductor industry.
In its most recent such effort, officials are now ‘informally advising’ local firms to use artificial intelligence (AI) chips developed by domestic firms like Huawei, instead of using those produced by Nvidia, according to a report by the South China Morning Post.
Nvidia’s H20 chip — that it has designed in keeping with US restrictions against China — is not officially banned, SCMP reported. However, Chinese regulators have been pushing local firms to cut back on purchases from Nvidia at least since May.
- Vishakha Saxena
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