HK Stock Market Move | Chip stocks continue their recent upward trend, as overseas semiconductor control measures are being introduced intensively. This continuous pressure is driving the domestic substitution of the chip industry chain.

Chip stocks continued their recent rise. As of the time of reporting, Semiconductor Manufacturing International Corporation (00981) rose 4.3% to HK$38.8; HUA HONG SEMI (01347) rose 4.25% to HK$23.3; SOLOMON SYSTECH (02878) rose 3.13% to HK$0.495; SHANGHAI FUDAN (01385) rose 2.55% to HK$14.48. On the news front, on the evening of January 13, the U.S. Department of Commerce issued temporary final rules called the "Artificial Intelligence Diffusion Framework," implementing new control measures on the export of advanced computing chips and proprietary AI models. On January 15, the Netherlands announced that it will expand the scope of export controls on semiconductor-related items. CITIC SEC released a research report stating that U.S. restrictions are driving domestic alternatives in AI computing power and advanced processes, estimating the market space for domestic AI computing chips at around $30 billion. They continue to recommend related domestic foundries, AI chip design, semiconductor equipment, and advanced packaging industries. Ping An Securities pointed out that under the guidance of national policies and financial support, the independent innovation capabilities of domestic enterprises will further improve. In the long term, the demand for domestication of core semiconductor technologies is increasing, with a strong willingness from domestic industry chain enterprises to increase domestication rates, providing more opportunities for domestic semiconductor companies. It is recommended to pay attention to the market potential brought by the localization of equipment, materials, components, and EDA imports. In addition, the U.S. government's export controls on China will also accelerate the development of China's AI-related software and hardware products for autonomous and controllable development.