Investing.com — The latest round of U.S. export controls on Chinese semiconductor players announced on Monday marks a significant tightening of restrictions but falls short of the toughest measures initially feared, Bernstein analysts said.
The US Bureau of Industry and Security (BIS) has added 140 entities to its Entity List, targeting Chinese semiconductor equipment suppliers and investment firms while sparing some of the country’s key players. The new measures are aimed at curbing China’s progress in advanced chip manufacturing technologies, focusing on areas such as high-bandwidth memory (HBM) and chip design software.
While the scale is smaller than the 200 entities previously feared, the move marks increased U.S. scrutiny, with Chinese wafer fab equipment (WFE) suppliers such as NAURA Technology Group Co Ltd (SZ:) and Piotech Inc (SS:), one of the top targets, Bernstein analysts said.
Wafer fabrication equipment is used to process raw wafers into finished chips for electronic devices. China is investing heavily in this equipment to increase its semiconductor production capacity.
Excluded from the list, however, is Chinese dynamic Random Access Memory (DRAM) chip manufacturer Changxin Memory Technologies, a decision that analysts say will benefit global memory players such as Japan’s Kokusai Electric Corp (TYO:) and Tokyo Electron Ltd. (TYO:).
Global WFE players such as Tokyo Electron, Advantest Corp. (TYO:) and Applied Materials Inc (NASDAQ:) are set to post modest gains as restrictions disrupt Chinese rivals’ operations. However, curbs on high-bandwidth memory shipping are unlikely to cause major harm to global giants Samsung Electronics Co. Ltd (KS:), which gets less than 20% of its HBM sales from China.
In the same way, SK Hynix Inc (KS:) is expected to benefit in the long run as Chinese competitors face production challenges. Tighter global supply is forecast to push DRAM prices higher, supporting SK Hynix’s profitability.
Domestic WFE companies are now largely dependent on a non-Americanized supply chain to meet U.S. restrictions. Bernstein analysts emphasized that most countries have minimal foreign exposure, which makes them isolated to some extent, but raises concerns about long-term growth.
