In the early morning of May 23, Beijing time, the U.S. Department of Commerce announced that a total of 33 Chinese companies and institutions would be included in the “Entity List”, including the Beijing Computing Science Research Center, Qihoo 360, and Harbin Institute of Technology. , Harbin Engineering University, K Express, Yuncong Technology, Oriental Netpower and other technology companies and institutions.
Being included in the “Entity List” by the United States means that the U.S. government can restrict exports, imports, or re-exports to these institutions in accordance with the Export Administration Regulations.
Main restrictions include: restrictions on the import of U.S.-origin goods, technology or software from the United States or other countries; import of goods from other countries if the value of U.S.-controlled items exceeds 25% , are subject to restrictions; products produced directly using US-origin technology or software, or produced in factories built using US-origin technology or software, are subject to restrictions.
The leading artificial intelligence leader is “hunted”
This is not the first time that the U.S. Department of Commerce has included Chinese companies on the “Entity List.” Since 2017, the U.S. Department of Commerce has included hundreds of Chinese companies in the “Entity List”. Well-known companies such as ZTE, Huawei, Sugon, iFlytek, and Hikvision have all been sanctioned.
In 2019, the U.S. Department of Commerce included Huawei and 70 of its subsidiaries on the list, including well-known domestic artificial intelligence services such as Megvii Technology, SenseTime Technology, and Yitu Technology 8 companies, including 8 companies, were included in the U.S. trade control list.
The technical advantages of companies included in the list this time, such as Shenzhen Web Vision, Yuntian Lifei, and Yinchen Intelligence, are concentrated in the field of facial recognition.
So far, China’s “Four AI Tigers” (Megvii Technology, SenseTime, Yitu Technology, and Yuncong Technology) have all been included in the “Entity List.” Since last year, the United States has added a total of 147 Chinese companies to its so-called “entity list.”
The list of 33 Chinese companies and institutions is as follows:
- Beijing Cloudmind Technology Co., Ltd.
- Beijing Cloud Computing Center Beijing Computational Science Research Center
- Beijing Jincheng Huanyu Electronics Co., Ltd.
- Center for High Pressure Science and Technology Advanced Research
- Chengdu Taico Optoelectronics Co., Ltd.
- China Jiuyuan Trading Company
- Cloudminds (Hong Kong) Limited
- Cloudminds Inc.
- Harbin Chuangyue Technology Co., Ltd.
- Harbin Engineering University
- Harbin Industry Harbin Institute of Technology
- Harbin Yun Li Da Technology and Development Co., Ltd.
- JCN (HK) Technology Co Ltd.
- K Logistics (China) Limited
- Kunhai (Yanjiao) Innovation Research Institute
- Dingfeng Multi-scale Boeing Institute Peac Institute of Multiscale Science
- Qihoo 360 Technology Co. Ltd.
- Qihoo 360 Technology Company
- Shanghai Nova Instruments Co., Ltd.
- Sichuan Dingcheng Material Trade Co., Ltd.
- Sichuan Xintianyuan Technology Co., Ltd.
- Sichuan Tusk Import and Export Trading Co., Ltd.
- Lijian Tianyan Technology Co., Ltd.
- Zhu Jiejin, associate professor at Fudan University.
- China’s Ministry of Public Security Institute of Forensic Medicine Security’s Institute of Forensic Science
- Aksu Huafu Textiles Co.
- CloudWalk Technology
- FiberHome Technologies Group and the subsidiary
- Nanjing FiberHome Starrysky Communication Development
- NetPosa
- Shenzhen Net Vision (subsidiary of Oriental NetPosa, Face recognition) SenseNets
- Yuntian Lifei Intellifusion
- IS’Vision.
Will the technology sector be impacted again?
The United States has taken constant actions against China this year. On May 15, the United States announced an upgrade to its chip restrictions on Huawei. All chip manufacturers that use American technology and equipment will not be able to accept orders from Huawei and its subsidiary HiSilicon. However, the United States also granted a 120-day buffer period.
Affected by this news, technology stocks experienced a large-scale correction last week, and major funds fled sharply. The Wind Cloud Computing Index fell by 6.54%, the Semiconductor Index fell by 4.66%, and the Chip Index fell by 4.46%. Stocks such as Vail, GigaDevice, Zhuosheng Micro, and Tongfu Microelectronics fell by more than 10% this week. ZTE, Huixin, etc. Top Technology and Sugon fell more than 5%.
In addition, on May 20, the U.S. Senate unanimously passed the “Foreign Companies Accountable Act”. Some requirements in the bill may require the compliance review process of Chinese concept stocks listed in the United States. Some changes occur, and the worst-case scenario may result inDelisted from the United States. Affected by this news, the performance of Chinese concept stocks has come under pressure. Alibaba has fallen 8.06% in the past three trading days, and popular Chinese concept stocks such as JD.com, iQiyi, and New Oriental have all fallen by more than 5% in the past three days. Among the popular Chinese concept stocks, only Pinduoduo’s stock price has been rising. The latest closing price surged 14.5%, and the closing price continued to reach a record high.
In addition, the “SMIC-Taikang One-on-One Communication Minutes” circulated online in the early morning of May 21 also had a huge impact on technology stocks. The minutes state that “if we apply for a license strictly in accordance with the law, the entire Huawei channel will be controlled; in theory, new orders cannot be accepted.” As soon as the news came out, SMIC’s Hong Kong stock price fell 7%.
Although SMIC quickly refuted the rumors, its stock price and the A-share technology sector did not stop the decline, but intensified the decline. On that day, the A-share Wind Semiconductor Index also fell overall by 3%. Only 4 of the 77 semiconductor companies closed in the red, and the total market value evaporated by nearly 90 billion.
At present, the United States’ suppression of China’s chip industry is becoming increasingly severe, and the substitution of domestic chips has become inevitable. Therefore, for the chip sector, U.S. sanctions may have a short-term impact, but in the medium to long term, as China focuses on high-tech industries such as chips, there is still great potential for domestic substitution in the future.
Everbright Securities believes that although the U.S. sanctions against Huawei are slightly stronger than market expectations, from the perspective of the big game, this is not unexpected. It is an expected and inevitable event. Since 2018, China and the United States have entered the stage of the Great Game. Therefore, even without the impact of COVID-19, in the context of this year’s US election, it is inevitable that the Great Game between China and the United States will escalate or the risk of international conflict will rise. In the short term, the escalation of trade frictions into technological blockades will affect market trading sentiment and risk appetite, but in the long term, market rises and falls reflect more on the ability of companies to create monetized profits.
Everbright Securities said that investors do not need to worry too much about the market outlook. The greater the external blockade pressure, the smoother the logic of internal loose policy hedging will be. At the same time, the greater the domestic investment in science and technology will be, which will help enhance the ability of domestic technology companies to create monetized profits.
BoC Securities believes that the U.S.’s upgraded restrictions on Huawei chips will accelerate the localization of semiconductor software, equipment and materials. Although the escalation of the Huawei incident has put great pressure on the domestic semiconductor industry chain in the short term, my country’s semiconductor industry chain has formed a virtuous cycle ecosystem, including packaging, foundry technology, equipment, materials, etc., which have been cultivated for about 20 years, and my country The electronic communications consumer market is huge, and the event itself will reversely promote the process verification and application of basic technologies such as semiconductor-specific software, equipment, and materials in local wafer production lines or design companies. Therefore, we are optimistic about semiconductor equipment and materials, and focus on recommending equipment, materials and software that are still stuck.
Industrial Securities stated that under the trend of localization of the semiconductor industry chain, it is optimistic about the growth potential of leading manufacturers in related industries, and at the same time judges that secondary market returns are an important condition for driving investment; guided by the trend, We should not over-examine the pricing results of the current market based on overseas valuation levels. The industry status and capabilities of first-line chip companies (such as Huawei HiSilicon and Goodix) and wafer foundries (such as SMIC and Huahong Semiconductor) are expected to continue to improve; ensuring the technology and supply of equipment and raw materials is the current industry key to development.
Huatai Securities believes that this news reflects to a certain extent that China’s semiconductor industry chain is still highly dependent on overseas equipment companies, and in an environment where international trade frictions continue and technology competition becomes more intense. , the demand for independent and controllable equipment will become more urgent, and the development of local semiconductor equipment leaders with initial import substitution capabilities is expected to further accelerate. Recommend Northern Huachuang, China Micro, and Changchuan Technology, and pay attention to Huafeng Measurement and Control, Jingsheng Electromechanical, and Xinyuan Micro.
Galaxy Securities also pointed out that the United States continues to increase sanctions on China’s high-tech sector, and the localization of semiconductor equipment cannot be delayed. It is recommended to contact Northern Huachuang, China Microelectronics Corporation, Xinyuan Micro, etc.
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