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Investing.com-- Semiconductor Manufacturing International Corp (HK:0981) led gains across Chinese chipmaking stocks on Wednesday on a report that the firm was running trials on locally build advanced chipmaking equipment.
SMIC, China’s biggest chipmaker by capacity, rose 5% in Hong Kong trade. Peer Hua Hong Semiconductor Ltd (HK:1347) rose 2.7%, while NAURA Technology Group Co Ltd (SZ:002371) and Yangtze Optical Fibre rose 5% and 2.4%, respectively.
Chinese AI chip major Cambricon Technologies lagged, trading sideways after logging strong gains last week.
The Financial Times reported on Wednesday that SMIC is running trials on producing China’s first locally built advanced chipmaking equipment, aimed at making artificial intelligence processors.
SMIC is testing a deep-ultraviolet lithography machine made by Shanghai-based start-up Yuliangsheng, the FT reported, citing two people with knowledge of the development.
DUV machines are a key component of advanced chip production, with Chinese companies standing to benefit greatly from domestic production of the technology.
The development would help China overcome U.S. controls on chipmaking technology exports and help further quell the country’s reliance on western technology for advanced AI processors.
To date, Chinese companies have relied heavily on devices built by Dutch chip equipment maker ASML Holding NV (AS:ASML), which is the world’s leading maker of advanced lithographic equipment. But local companies have been barred from accessing more advanced offerings from the Dutch company by U.S. export controls.
China is also denied access to extreme ultraviolet photolithography machines, which are used to make the most advanced processors for companies such as NVIDIA Corporation (NASDAQ:NVDA).
Chips and chipmaking technology became a contentious topic for China in recent trade dialogue with the U.S., with Beijing seen lambasting Washington’s export restrictions. China was also seen calling for the use of more domestically produced chips.
Reports this week showed that Nvidia’s new China-focused chip was seeing languid demand, with local developers seen preferring the controversial H20 chip, production of which Nvidia scaled down recently.
Bets on chip independence a strong rally in Chinese chipmaking stocks through August.
Still, the FT report said that while the SMIC trial showed promising early results, it was unclear if and when the machine will be used for mass chipmaking.
Baidu , Alibaba shares buoyed by AI chip optimism
Chinese chipmaking stocks were also encouraged by more signs that the country’s internet giants were adopting locally made chips. A report from The Information showed last week that Baidu Inc (HK:9888) and Alibaba Group Holding Ltd (HK:9988) were both testing their AI models on Chinese made chips.
Local media reported on Wednesday that China Unicom’s Sanjiangyuan data center had signed contracts to deploy AI chips from several Chinese firms, including Alibaba’s chip unit T-Head.
Alibaba’s shares rose 4.4%, while Baidu rallied nearly 14%. Sentiment towards Baidu was also encouraged by an analyst upgrade of the firm on its AI chip ambitions, Bloomberg reported.