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The US embargo on China’s advanced semiconductor technology and the development of its semiconductor technology base have hurt China.
Shares of top Chinese chipmakers lost $7.7 billion in market value on Oct. 10, when new U.S. export controls came into effect limiting sales of semiconductors made with U.S. technology.
The controls barred US citizens or entities from working with Chinese chipmakers and restricted the export of manufacturing equipment.
Also read: The US Chips Act requires competitors to share profits with the country, refrain from kickbacks and China.
A staggering $52 billion U.S. federal program to boost domestic chip manufacturing capacity will block companies receiving federal funding from materially expanding beyond 28 nm chips in China for a decade. Companies competing for funding cannot ramp up production of advanced chips in China.
Leading US technology ETFs SPDR Select Sector Fund – Technology (NYSE: XLK ), VanEck Semiconductor ETF (NASDAQ: SMH), and iShares Semiconductor ETF (NASDAQ: SOXX ) gained between 17.6% – 25.5% year-to-date.
SMH and SOXX with exposure Nvidia Corp (NASDAQ:NVDA), Taiwan Semiconductor Manufacturing Co. Ltd (NYSE: TSM ), Advanced Micro Devices, Inc (NASDAQ: AMD ) ASML Holding NV (NASDAQ: ASML) Texas Instruments Inc (NASDAQ: TXN ), Intel Corp (NASDAQ: INTC ) and other chipmakers led the gains.
XLK has significant exposure. Microsoft Corporation (NASDAQ: MSFT ), Apple Inc (NASDAQ: AAPL ), followed by chipmakers Nvidia and others.
In comparison, leading China tech ETFs trailed behind their US peers. IChina shares large-cap ETF (NYSE: FXI), KraneShares Trust KraneShares CSI China Internet ETF (NYSE: KWEB), and iShares MSCI China ETF (NASDAQ: MCHI ) has gained between 0.4% – 2.7% YTD.
Chinese ETFs have significant exposure. Tencent Holding Ltd (OTC: TCEHY), Alibaba Group Holding Limited (NYSE: BABA ) Baidu, Inc (NASDAQ: BIDU ), JD.Com, Inc (NASDAQ: JD ) and others.
Other factors, such as China’s crackdown on technology, have also affected major players such as Alibaba, JD and Baidu.
Photo by Tatiana Popova and rawf8 via Shutterstock
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