Some of China’s major DRAM chip makers are likely to face sanctions from the US government in Washington’s latest attempt to slow China’s high-tech ambitions, German investment giant Deutsche Bank said.
The company made this assessment as part of a research note lowering its price target on shares of Dutch semiconductor manufacturing equipment giant ASML, citing a potential hit to sales in China.
“We expected investment in China’s mainstream nodes to remain strong going forward, but with overcapacity Now that we’re seeing signs, that doesn’t seem to be the case.”
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“This leaves spending in China dependent on the ambitions of DRAM giants like CXMT, Wuhan Xinxin, and Swaysure, with the potential for the U.S. to impose export restrictions,” Sanders wrote.
Three chipmakers have been targeted by U.S. authorities for their ongoing production of high-bandwidth memory (HBM) semiconductors used in artificial intelligence chipsets and for their ties to sanctioned Chinese tech giant Huawei. It has become.
Changxin Memory Technology (CXMT), China’s top maker of DRAM chips, has already developed samples of HBM chips despite Washington’s measures to restrict the flow of advanced chip manufacturing technology into China from 2022. are.
Similarly, Wuhan Xinxin is building a factory capable of producing 3,000 12-inch HBM wafers, Reuters reported. According to Reuters, construction on the factory began in February this year, according to documents from the company database Kichacha.
Meanwhile, SwaySure has attracted the attention of the U.S. government for its ties to Huawei, which has quickly emerged as a significant player in China’s semiconductor industry.
Huawei’s launch of its Mate 60 smartphone last year set off alarm bells in Washington after disassembly of the device revealed that the company had successfully developed China’s first domestically produced 7 nanometer (nm) chip. Huawei jointly developed the chip with Semiconductor Manufacturing International Corporation (SMIC), China’s largest chip maker.
The US government said SMIC violated sanctions in the process and has since made intensive efforts to slow Huawei’s progress. As part of that effort, it’s also scrutinizing companies like SwaySure and CXMT.
ASML’s China revenue is on the decline
Possible sanctions against Chinese chip makers are “not ideal for investors in ASML,” Deutsche Bank warned.
ASML is Europe’s most valuable technology company, generating nearly half of its revenue this year from Chinese customers.
However, the Dutch government imposed severe export restrictions on the company from the beginning of this year. ASML now also needs licenses to sell a wide range of chip-making equipment to China, as well as to service and maintain the billions of dollars of machinery it already sells to Chinese customers.
ASML generates approximately 25% of its revenue from servicing, maintaining and upgrading its growing installed base of equipment.
According to a Deutsche Bank note, ASML’s revenue from China will decline by 22% due to new restrictions and potential new risks in the Chinese market.
The bank lowered its price target for ASML shares from 1,100 euros to 950 euros. The company is currently trading at 747.7 euros, up nearly 5% in European trading on Thursday.
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Vishaka Saxena
Vishakha Saxena is Asia Financial’s multimedia and social media editor. She has been working as a digital journalist since 2013 and is also an experienced writer and multimedia producer. As a trader and investor, she has a keen interest in the new economy, emerging markets, and the intersection of finance and society. You can write to her at (email protected).
