HK Stock Market Move | Semiconductor stocks surged in morning trading, with Hua Hong Semiconductor (01347) rising over 5% at one point. Institutions are optimistic about the opportunities for domestic semiconductor replacements.

In the early trading session, semiconductor stocks surged. As of the time of writing, HUA HONG SEMI (01347) rose by 5.71% to 37 Hong Kong dollars; Semiconductor Manufacturing International Corporation (00981) rose by 4.07% to 47.3 Hong Kong dollars; SHANGHAI FUDAN (01385) rose by 3.14% to 26.3 Hong Kong dollars; SOLOMON SYSTECH (02878) rose by 2.5% to 0.41 Hong Kong dollars. On the news front, on the 14th local time, the Trump administration announced that it has initiated a "232 investigation" on semiconductors and drugs. In addition, NVIDIA announced that they recently received notification from the U.S. government that the export of H20 chips with H20 memory bandwidth and interconnection bandwidth to China and other countries and regions requires a license. It is worth mentioning that the China Semiconductor Industry Association recently issued an emergency notice regarding the determination of the "origin" of semiconductor products, clarifying that the origin of integrated circuits is based on the location where the chips are manufactured, rather than the location where the chips are packaged. CICC pointed out that regarding exports, they believe: 1) overall, semiconductor design companies have a small exposure to sales to the United States; 2) looking at the major manufacturing sectors, wafer foundry export proportion to the US is low, while packaging and testing export proportion to the US is relatively high, but top manufacturers have diversified production capacity layout in Southeast Asia and other regions. Regarding imports, they believe that the domestic market in China has a vast demand for semiconductor products, and the current (April 13) tariff policy in China is positively contributing to the localization of semiconductor chips and production factors. The bank is optimistic about the opportunities for domestic substitution in the semiconductor design and manufacturing sectors under this Chinese tariff policy.