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China Approves Fund Targeting Korean, Local Chipmakers

Huatai-PineBridge applied for an ETF to invest in top Korean chip firms such as Samsung and SK Hynix, as well as Chinese chipmakers like SMIC and Montage Technology


Chinese regulator gives greenlight to fund targeting Korean chipmakers.
News of approval for the exchange-traded fund comes at a sensitive time for Chinese and Korean chipmakers. Photo: Reuters.

 

China has approved the country’s first mutual fund targeting top Chinese and South Korean chipmakers, an official at Huatai-PineBridge Fund Management Co said.

The news amid an escalating tech war, after the Biden Administration announced sweeping bans on exports of advanced computer chips late last week.

The China Securities Regulatory Commission’s approval comes amid heightened geopolitical tensions between the world’s two largest economies over Taiwan and now Washington’s move to hobble China’s chip industry, given China uses advanced computer chips in supercomputers linked to a range of military projects.

Huatai-PineBridge made the application for regulatory approval on August 9. The exchange-traded fund (ETF) will invest in top Korean semiconductor firms including Samsung Electronics and SK Hynix, as well as Chinese chipmaking giants such as Semiconductor Manufacturing International Corp (SMIC) and Montage Technology Co.

ALSO SEE:

China’s Chip Industry Faces Deep Pain From US Curbs – FT

 

 

‘Closely Integrated’

“The Chinese and Korean semiconductor industries are expected to be closely integrated,” creating synergies, Huatai-PineBridge said in prepared marketing material for the ETF, whose launch date has not yet been determined.

The fund will also benefit from China’s accelerated pace towards tech self-sufficiency amid US sanctions, according to the marketing material, which mentioned the US blacklisting of China’s Huawei Technologies, and the recently enacted CHIPS and Science Act.

In 2021, South Korea was China’s second-biggest exporting country in equipments, including chipmaking tools, and Chinese exports to South Korea have also been rising, the fund manager said.

South Korea said on Saturday there would be no significant disruption to equipment supply for Samsung and SK Hynix’s existing chip production in China from the US move.

The new US export controls are an abuse of trade measures, China’s foreign ministry spokesperson Mao Ning said on Saturday.

The newly approved ETF will track the CSI KRX China-Korea Semiconductor Index.

The index was launched as part of a broader cooperation agreement signed last year between the Shanghai Stock Exchange and the Korean Exchange (KRX) to promote cross-border investment between the two markets.

 

  • Reuters with additional editing by Jim Pollard

 

 

ALSO SEE:

New US Export Rules Seek to Contain China’s Chip Sector

 

China Warns US Chip Tech Export Curbs Will ‘Backfire’

 

US Chip Ban Likely to Hit Most of China’s Tech Giants

 

US Orders Nvidia to Stop Sale of Advanced Chips to China

 

 

 

Jim Pollard

Jim Pollard is an Australian journalist based in Thailand since 1999. He worked for News Ltd papers in Sydney, Perth, London and Melbourne before travelling through SE Asia in the late 90s. He was a senior editor at The Nation for 17+ years and has a family in Bangkok.

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