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All posts by RWZ

Following the U.S., the Netherlands and Japan to Take Action on Chinese Chip Industry

Popular Chinese online news site Redian recently republished a Bloomberg report indicating that the Netherlands and Japan, home to major suppliers of semiconductor manufacturing equipment, are about to join a Biden administration-led effort to limit exports of the technology to China. Export controls in the Netherlands and Japan could be finalized as soon as late January, according to people familiar with the matter. Japanese Prime Minister Fumio Kishida and Dutch Prime Minister Mark Rutte discussed their plans with U.S. President Joe Biden at the White House earlier this month. “I am very confident that we will get there,” Rutte told Bloomberg in an interview on the sidelines of the World Economic Forum in Davos, Switzerland. However, the Netherlands and Japan’s restrictions may not go as far as the U.S. restrictions do, which not only limit the export of U.S.-made machines but also prevent U.S. citizens from working with Chinese chipmakers. Even so, once all three countries take action, China may find itself even less able to acquire the technology or expertise needed to manufacture the most advanced semiconductors. A spokesperson for the White House National Security Council declined to comment. The U.S. Commerce Department rules are opposed by some U.S. semiconductor companies but supported by bipartisan lawmakers. China said Biden’s new chip tech curbs will hurt its economic recovery.

Source: Redian, January 19, 2023
https://redian.news/wxnews/231251

Global Times: Biden Administration Extends China Chip Export Restrictions to Macau

Global Times recently reported that the United States has further tightened export controls on Chinese chips and chip manufacturing equipment, and has further extended the restrictive policies imposed on Mainland China to Macau. The Bureau of Industry and Security (BIS) of the U.S. Department of Commerce published an “interim final rule” in the Federal Register, saying that the control measures announced in October last year also apply to the Macau Special Administrative Region. The announcement claimed that the restricted exports of chips and chip manufacturing equipment may be transshipped from Macau to other places in Mainland China, so the new measures include Macau in the scope of export restrictions. After the implementation of the measure, U.S. companies will need to obtain a license to export to Macau. Last October, without any prior warning, the U.S. Department of Commerce imposed the most extensive restrictions on chip-related exports to China in history. In addition to prohibiting the export of advanced chips, technology and equipment, it also prohibits “Americans” from supporting the “development or production’ of advanced chips in Chinese companies without permission.”

Source: Global Times, January 18, 2023
https://world.huanqiu.com/article/4BLNDLEqFe3

China’s New Energy Vehicle Growth Slowed after Subsidy Cancellation

Well-known Chinese news site Sina (NASDQ: SINA) recently reported that, according to the data just released by the China Passenger Car Association (CPCA), from January 1 to 15, the national new energy passenger car manufacturers wholesaled 187,000 units, a month-over-month decrease of 38 percent. The market retail sales reached 184,000 units, a month-over-month decrease of 33 percent. According to a report released by CPCA, on January 18, the growth of new energy vehicle sales has entered a bottleneck stage. After the discontinuation of the government’s new energy policy in 2023, sales growth will be a serious problem. At the same time, the prices of new energy models have increased too much in the early stage. Orders are decreasing and the price cuts of leading manufacturers such as Tesla have been aggressive, which has caused consumers to take a wait-and-see attitude. China’s new energy vehicle subsidies started in 2010. In that year, a total of 25 cities in three batches were selected to carry out demonstration and promotions of energy-saving and new energy vehicles. Since then, the industrialization process has started. In 2016, the subsidy policy entered the full application stage. Under the government subsidy policy dividends, the new energy vehicle market has achieved rapid development. Recently, Tesla China began to cut prices, which disrupted the market rhythm to a certain extent. After Tesla announced the price cuts, the number of new orders increased significantly, and the traffic at Tesla stores in many regions of the country increased significantly too. Some customers who originally planned to order other brands even cancelled their orders and turned to Tesla.

Source: Sina, January 20, 2023
https://finance.sina.com.cn/chanjing/cyxw/2023-01-20/doc-imyauhaw5442320.shtml

Global Times: TSMC Considering Building a Second Factory in Japan

Global Times recently reported that the Japanese government actively invited TSMC (Taiwan Semiconductor Manufacturing Company) to expand its manufacturing capacity in Japan and introduce EUV process. The TSMC CEO confirmed for the first time at a press conference that TSMC is indeed considering building a second factory in Japan. TSMC is currently building a fab with special process technology in Japan, which will use 12/16nm and 22/28nm process technology, and plans to enter mass production by the end of 2024. Though the first factory is still under construction, TSMC plans to build a second fab at the same time, as long as customer demand and the level of government support make sense. According to previous Japanese media reports, TSMC’s first factory is being constructed in Kumamoto Prefecture, Japan. The Japanese government had previously decided to subsidize nearly half of the 1 trillion yen investment required by TSMC to build the factory. In response to foreign government invitations, TSMC is promoting the construction of factories overseas. In last December, TSMC announced that it would increase its planned investment of US$12 billion to US$40 to build two factories in Phoenix, Arizona. 4nm and 3nm chips will be put into production in 2024 and 2026. That represents TSMC’s largest investment outside of Taiwan and one of the largest foreign direct investments in U.S. history.

Source: Global Times, January 12, 2023
https://world.huanqiu.com/article/4BG6VCqka5b

Sing Tao: Uganda Cancelled Railway Contract with China

Primary Hong Kong news media Sing Tao News Group recently reported that, due to dissatisfaction with China’s reluctance to finance the project, the Ugandan government has terminated its contract with a Chinese company to build a railway in the local area. Uganda is seeking a Turkish company to take over. Ugandan officials in charge of coordinating the project confirmed the news. According to the contract, one of the conditions is that China is obliged to assist Uganda in obtaining financing for the project, but this has not happened. The Ugandan authorities sent a letter to China Harbor Engineering (HEC) to terminate the contract in December 2022. HEC has not raised any objections so far. This 273-kilometer railway connects Uganda’s capital, Kampala, and the border with Kenya. In order to connect with the international standard-gauge railway leading to Mombasa, Kenya’s Indian Ocean port, the new railway construction plan also adopts the international standard gauge. The entire project is estimated to cost US$2.2 billion. The Chinese spokesperson of the Foreign Affairs Ministry said China and Uganda have established a comprehensive cooperative partnership and that the pragmatic cooperation between the two countries is at the forefront of China-Africa cooperation.

Source: Sing Tao, January 14, 2023
https://bit.ly/3INEVpF

China’s December Imports/Exports Continued to Decline

Well-known Chinese news site Sina (NASDQ: SINA) recently reported that, according to the data released by the Chinese General Administration of Customs, in U.S. dollar terms, the Chinese exports in December 2022 decreased by 9.9 percent year-over-year, and the imports decreased by 7.5 percent year-over-year. In December, the exports declined for the third consecutive month and the decline has continued to expand. This was mainly due to the increasing pressure of the global economic recession and the slowdown in external demand. December’s exports to the United States fell by 19.5 percent year-over-year. They have continued to be in a state of deep decline and there has been a negative growth for five consecutive months. This has mainly been due to the obvious decline in the demand for Chinese goods in the U.S. domestic market. The Fed’s continuous and substantial interest rate hikes have formed a strong inhibitory effect on the aggregate domestic demand in the United States. In addition, after the pandemic, U.S. domestic consumption has shifted from goods to services. It is very difficult for Chinese exports to the U.S. to turn positive in the short term. In the meantime, China’s exports to the EU fell by 17.5 percent year-over-year. This was a 6.9 percentage points widening loss from the previous month, and a negative growth for four consecutive months. Also, China’s exports to Japan fell by 3.3 percent year-over-year. Overall, China’s exports will slow down sharply in 2023. It is expected that the surplus of the trade in goods  will narrow significantly. In addition, as the outbound travel will gradually resume, the deficit in service trade may expand again.

Source: Sina, January 13, 2023
http://stock.finance.sina.com.cn/stock/go.php/vReport_Show/kind/search/rptid/726955017769/index.phtml

CNA: First Day of Spring Festival Travel Recorded 30 Million Travelers

Primary Taiwanese news agency Central News Agency (CNA) recently reported that China’s Covid prevention policies have been downgraded. Many people are having their first return home reunion in three years. On the 7th, the first day of the Spring Festival travel rush, a total of 34.736 million passengers were transported by railways, roads and airways in China. This represents an increase of 38.9 percent over the same period in 2022. China’s Spring Festival travel is known to be the largest population movement on the surface of the Earth. The 2023 Spring Festival travel period is from January 7th to February 15th, a total of 40 days. Xu Chengguang, the Deputy Minister of the Ministry of Transportation, said that the total passenger flow during the Spring Festival travel period this year is estimated to be about 2.095 billion, an increase of 99.5 percent over the same period last year, and returned to 70.3 percent of the same period in 2019. Among them, visiting relatives accounted for about 55 percent of the passenger flow, work accounted for about 24 percent, plus tourism and business travel accounted for about 10 percent respectively. However, this year’s Spring Festival travel peak is superimposed with the Covid peak, which made this Spring Festival travel the most uncertain and the most complicated one. The situation introduces the greatest difficulties and challenges in recent years. At this moment, it is hard to find train tickets, and many popular routes have been sold out. In addition, there is also an increase in demand for flights. According to the Civil Aviation Administration of China, during the Spring Festival travel season, an average of 11,000 passenger flights will be arranged daily.

Source: CNA, January 8, 2023
https://www.cna.com.tw/news/acn/202301080129.aspx

In 2022, Chinese Companies’ U.S. IPOs Raised about 96 Percent Less than in 2021

Well-known Chinese news site Sohu (NASDAQ: SOHU) recently reported that it has been a year and a half since the fever of Chinese companies going public in the U.S. cooled down. According to Wind Data, in 2022, Chinese companies went public in the United States and raised a total of US$582 million, a decrease of about 96 percent compared with the annual financing amount in 2021. Of the dozen or so companies that went public in the U.S. in 2022, most of them were small companies with a fundraising amount of less than US$50 million. The scale of its financing was significantly lower than the level of the previous two years. In 2021, about 40 Chinese companies went public in the U.S., and 16 of them raised more than US$100 million. In 2020, 18 US-listed companies raised over US$100 million. In 2022, as of December 28, the number of IPOs listed in the United States was only 17, setting a new low for the past six years. At present, data-related technology companies going public in the United States still face strict scrutiny from both Chinese and American regulators. Several companies have even withdrawn their prospectuses for listing in the United States.

Source: Sohu, January 2, 2023
https://www.sohu.com/a/623887838_120814277