Chinese tech giant leads $13b semiconductor rally

China’s Semiconductor Manufacturing International Corp (SMIC) shares surged 28 per cent on Monday to a four-year high, leading a $13 billion rally in the semiconductor sector amid expectations of increased support from Beijing.

Other players in the sector, such as Hua Hong Semiconductor Ltd. and Shanghai Fudan Microelectronics Group Co., also saw a combined increase of over $2 billion during the same period.

The recent sector rally reflects a broader market recovery since late September, driven by renewed confidence in China’s economy due to policy support.

Investors anticipate Beijing’s support for the semiconductor industry, a key player in technology development. The ongoing conflict with the US for technological supremacy underscores the importance of chips.

Chinese leaders are expected to announce additional policy measures to stimulate economic growth following signals to reverse the nation’s slowdown. Stimulus measures, including interest rate cuts and financial support for the stock market, have been introduced.

Hong Kong-listed shares are currently the only option for trading Chinese chip firms as mainland markets are closed until Tuesday. SMIC representatives were unavailable for comment outside of regular business hours.

China is investing heavily in its chipmaking industry, with plans to spend over $142 billion according to the Semiconductor Industry Association. The government is also raising $27 billion for the Big Fund to support investments in companies like SMIC and Huawei.

Attribution: Bloomberg

Subediting: M. S. Salama