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China chip industry sees opportunities in Trump return

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Firms have been ramping up purchases of foreign chipmaking

equipment

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Chinese sector is better prepared this time around, says

analyst

By Eduardo Baptista and Fanny Potkin

BEIJING/SINGAPORE, Nov 8 (Reuters) - China's

semiconductor industry is readying itself for four more

combative years under Donald Trump as U.S. president by ramping

up purchases of foreign chipmaking equipment and looking out for

opportunities to hire overseas talent and forge new alliances.

Among the strategies being considered are the pursuit of

closer ties with countries and firms that may feel alienated by

the U.S. President-elect's future policies, and a doubling down

on self-sufficiency, according to a review of more than 30

articles and research notes published by Chinese chip firms,

associations and analysts this week after Trump's win.

Trump notably went after Chinese telecoms conglomerates

Huawei and ZTE (Shenzhen:000063), as well as chipmaker SMIC

, during his first term in office, placing them on

trade blacklists that curbed their access to crucial U.S.

hardware and software. The Biden administration in contrast has

leaned on broad export controls, meant to cut off all of China

from access to the most advanced chips made by U.S. firms.

Zhu Jing, deputy secretary-general of the Beijing

Semiconductor Industry Association, urged Chinese chip firms on

Thursday to beef up their overseas business and expand to more

countries, saying there could be opportunities to resume

procurement of certain chip imports should global coordination

between the U.S., Japan and Europe to enforce sanctions against

China weaken under Trump.

Companies should also step up to attract overseas talent if

the Trump administration repeats the stance of its first term

and implements policies that make it difficult for Chinese

students and professionals to work in the United States, he said

in an article published on WeChat.

"After Trump takes office it is possible that there will be

some benefits to the development of China's semiconductor

industry in terms of professional talents, multinational

companies and foreign cooperation. I recommend that we adapt to

the new situation and changes in a timely manner," he said.

Many of the articles also predicted the industry would see a

step up in export controls and potential tariffs against it

under Trump and that doubling down on self-sufficiency is the

way forward.

"Trump's first term made us realise the importance of

semiconductors and the necessity of localisation, paving the way

for China's semiconductor industry to become self reliant,"

Jinan Lujing Semiconductor Co, a maker of security chips and

power devices, said on its WeChat account.

The industry had been prepared for its relationship with the

U.S. to stay difficult whether Trump or his opponent Kamala

Harris won, though some had expected more long-lasting

challenges for the sector under Harris.

BETTER PREPARED

China has ramped up its purchases of semiconductor equipment

from overseas. 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.

Of that, $7.9 billion was spent on lithography machines,

which are needed to make the most advanced chips, up 35.44%

year-over-year.

Most of these lithography machines came from the

Netherlands, valued at $7 billion. ASML Holding

stopped shipping its most advanced deep ultraviolet lithography

(DUV) machines to China this year, and in some cases, older DUV

models for certain fabs, following rules rolled out by the Biden

administration last year. The company has been unable to ship

its extreme ultraviolet lithography (EUV) machines to the

country since 2019.

Two industry sources told Reuters that Chinese companies had

been maximising semiconductor equipment orders to protect

themselves from any election impact. The sources did not wish to

be identified due to the sensitivity of the matter.

"Chinese tech companies, having been impacted by tariffs

during the first Trump administration, have progressively

expanded their production capacities to mitigate future risks,"

said Nori Chiou, investment director at Singapore-based White

Oak Capital Partners.

"They are more prepared this time and feel more ready than

with the 2018 trade war and the 2020 election."

(Additional Reporting by Liam Mo; Writing by Brenda Goh;

Editing by Muralikumar Anantharaman)