China’s Got a Chip on Its Shoulder
Investors bet that the likes of Huawei will need domestic suppliers when the trade war crimps imports.
Chinese chipmaking seems like a $300-billlion opportunity. The reality may be different.
Photographer: Kevin Frayer/Getty Images
From sanctions to export restrictions, the rest of the world views China’s chip champions like Huawei Technologies Co. and ZTE Corp. with suspicion and skepticism. But inside the country, all investors see is a $300 billion-a-year golden opportunity. One could almost say that the Chinese have a chip on the shoulder by rewarding semiconductor startups with such a vengeance.
Companies that have anything to do with the industry are among the year’s best performers. Of the 44 names classified as semiconductor stocks by the widely followed local index provider SWS Research, the average gain is a whopping 170%. They command $128 billion of market cap, backed by only $15.5 billion of annual sales.