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Chinese chip firms vow to localise supply chains amid US

curbs

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US curbs may not disrupt Chinese chip progress, analysts

say

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CXMT exclusion brings relief to South Korean chip

suppliers

By Eduardo Baptista and Heekyong Yang

BEIJING/SEOUL, Dec 3 (Reuters) - Chinese chip companies

targeted by Washington with fresh export controls have vowed to

speed up supply chain localisation and said they would be able

to continue production thanks to recent efforts to build

equipment stockpiles.

The latest curbs, the third U.S. crackdown on the Chinese

sector in three years, focused on chipmaking equipment, software

and high-bandwidth memory. They restrict exports to 140

companies, including chip equipment maker Naura Technology Group

and ACM Research ( ACMR ).

Empyrean, a maker of electronic design

automation (EDA) tools also known as Beijing Huada Jiutian

Technology, said its inclusion on the list would have little

impact on operations.

"The company will seize the development opportunity to

accelerate the localisation process of full-process EDA tools,"

it said in a stock market statement.

Jiangsu Nata Opto-Electronic Material, which

manufactures materials used in chipmaking, told Chinese news

outlet Yicai it had stocked up and would also make domestic

substitutions, but did not provide specifics.

Others, such as semiconductor test systems provider Beijing

Huafeng Test & Control Technology, said they had

already fully localised their supply chain, the 21st Century

Business Herald newspaper reported.

While Chinese authorities called the move "economic

coercion", the measures appeared to have little impact on

chip-making stocks, which rose slightly on Tuesday as analysts

said the curbs were less stringent than feared.

MANAGEABLE DISRUPTION

The U.S. curbs target the "weakest spot" in the Chinese

semiconductor industry, which relies heavily on foreign

equipment for manufacturing, said Martijn Rasser, managing

director at Datenna, a data intelligence platform focused on

China's technology.

Capital expenditure by the Chinese chip industry next year

will likely fall by $10 billion, or about 30% year-on-year, to

$35 billion, as a result of these curbs, Jefferies analysts said

in a note.

But other analysts said the curbs may not have the desired

effect as Chinese chip firms have since last year ramped up

purchases of foreign made equipment from the likes of Dutch

lithography machine maker ASML and U.S. toolmaker Lam

Research ( LRCX ).

For the first nine months of this year, China's imports of

semiconductor equipment increased by a third to $24.12 billion,

according to data from China Customs.

"This was as close to the continuation of the status quo in

terms of it's making things very difficult for manufacturers at

the leading-edge but it's not going to disrupt that progress any

more than the existing regulations," said Jeff Koch, an analyst

at research group SemiAnalysis.

CXMT EXCLUSION

The exclusion from the entity list of ChangXin Memory

Technologies (CXMT), China's leading manufacturer of a key

component in AI chips, surprised some.

The Biden administration says the restrictions are aimed at

limiting China's ability to access and produce chips that

advance AI for military applications or threaten U.S. national

security.

Shares of some South Korean equipment suppliers to CXMT

firmed on Tuesday after its exclusion. CXMT did not immediately

respond to a request for comment.

"The development has brought short-term relief to South

Korea's chip sector, as their China-bound revenue is unlikely to

be significantly affected for now," said Ryu Young-ho, an

analyst at NH Investment & Securities.

Shares of Jusung Engineering, a CXMT supplier,

were up 7.7% in morning trading, after falling nearly 7% the

previous session amid concerns about the pending restrictions.

Mirae Corp, a South Korean chip equipment maker

that derived about 15% of its total revenue from CXMT in the

first half of this year, signed about 9 billion won ($6.41

million) worth of supply deals with CXMT this year so far. Its

shares rose 1.4% in morning trade, extending gains of 7% in the

previous session.

($1 = 1,403.3800 won)